When the exceptional becomes everyday (or when the unforeseen lasts)

We should all be very aware that what we have experienced from March/April to today is so exceptional that it will probably never happen again. As time goes by, this magnificent period will be only a memory, remembered by many with nostalgia.

Here are the facts: the immense outflow of exports to China continues, Europe is seeing its internal market draining, and that pigs have begun to increase in price- in the middle of November no less!

It has taken about two months to change the frame of mind of those who set the reference price in Spain. Objectively, the factors that justified increases on the 21 and 28 were already in place weeks ago: Denmark had to lead increases already in October, the Netherlands had to free itself at the beginning of November and, finally, Germany had to abruptly break its "repetitive barriers" in the middle of the month in order for Mercolleida to give its opinion on the [now] indisputable increase. A six-cent increase per kilo/live in two weeks is a tangible rise, a testimony of strength.

Pigs are rising steadily and 2019 will be remembered as a record year for production profits. Let's see if we'll close the year at a never-before-seen level. All eyes are on China.

The market is unmatched; with China paying between 0.50-1 euro above any EU price, it is impossible to foresee or plan anything. The imminence of the Chinese New Year, which paralyses everything, may bring a recession in the pace of cargo but slaughterhouses will continue to freeze at maximum in order to load and ship in containers in January.

As long as the gigantic Chinese deficit persists, the present situation will continue. Nothing seems to indicate that China is winning in its fight against ASF; we cannot predict when the decimated Chinese herd will recover; professionally recognized consultants are predicting a minimum of three years from now. We cannot even imagine what will become of the processing industry in Europe. Without being able to pass on the price increases of processed products, there is nothing to do, there is no escape... they'll have to close.

So far this year, Spanish exports of pork have risen by 10% in total (significantly more than the increase in slaughter, meaning consumption in Spain has declined). Spain has exported a total of 417,000 tons to China from January to September. This figure is up 70% from 2018 and also represents 22.15% of Spain's total exports. Until a few years ago, Spanish biggest client was undoubtedly France; China came and now buys almost twice as much as France.

Overflowing euphoria should not blind us or cloud our senses. It seems reasonable to ask questions about the future: what will happen when China returns to self-sufficiency? What will Spain do with all the pigs and pork that it has overproduced in the meantime?

Prudence obliges us to think carefully about the future. We should consider different scenarios for the coming days. We know that we are living in a bubble right now. Drawing up different contingency plans seems wise even at the risk of being labelled as a doomsayer. Having a plan A, a plan B (and even a plan C) is smart. It's not good to have all your eggs in one basket.

We will have to lie in the bed we make, so let's not do so forgetting the fleetingness of the current situation.

Guillem Burset