Mercedes Vega, General Director for Spain, Italy & Portugal
We are in the middle of August and we have the highest market price in the last five years. This rise began in mid-June and since a month ago when it reached 1,456€/kg of live weight (US 73.13¢/lb) has been unchanged until this, week when it reached 1,465€/ kg liveweight (US 73.13¢/lb). The previous years trend for lower summer prices has been broken al around Europe. A rise of 7 € cents/ kg in Germany with a price of 1,850€/kg of the carcass (US 93.01¢/lb). We also observe higher prices in Denmark, Belgium, and Italy.
It is the ASF effect that we feel in EU, as in the rest of the world. On one hand we can sense the fear/worry of ASF spreading in western Europe, but on the other hand is the joy/optimism, of the hire prices rising to levels of 2017 – highest reference in the last 5 years
The EU pork supply is inferior to other years. In the first quarter of 2019 , the EU market has processed 350,000 hogs less than in the same period of 2018. Spain production has increased by just over half a million processed hogs, while Germany has dropped by 1 million hogs. There are fewer hogs, but more weight is sought.
There is a lower supply of hogs because of the summer temperature, but this is balanced by a lower demand from the packing plant. Some have stopped working one day per week, for balancing the lower supply and the pork price. Producers are retaining what they can, to achieve higher weights seeing the price trend to rise.
To this we add that the new processing center of the Pinni Group that begun its activity and needs hogs, in greater or lesser quantity, to subtract the offer.
But perhaps the most important marker of the market, is the piglet price. Currently a year ago the base price of Mercolleida was € 20 (US $22.20) and this year it is € 35(US $38.75), the sale price in August 2018 with premiums was € 37(US $41) and now it is € 58 (US $64.21), the highest price ever recorded this time of the year! This price indicates the optimism and confidence for the future of the industry. The piglets that are entering now in the feeder’s facilities are those that will be marketed mid November- past years price was € 1,038/kg liveweight (US 52.14¢/lb) and € 1,028/kg liveweight (US 51.64¢/lb)in 2018 and 2017 respectively. This big price difference shows where the market is today.
High demand from China from the last couple of weeks is helping Spanish packing plants to empty their chambers after a few months of atony. Seeing this Chinese importers already agree to negotiate higher prices every week.