Analysis Pigs & Pork
Pork market takes a significant hit
The pork market has clearly taken a downward turn. After a significant decrease in carcass prices, slaughterhouses have significantly adjusted their purchase prices downwards. The fact that the entire market followed the trend gave slaughterhouses the confidence to further lower meat prices.
The pig price (DCA Market Price) has taken a significant step down. In week 27, pigs were traded for €2.16 per kilo. A week later, the price dropped by as much as 10 cents, to €2.06 per kilo.
The lower pig price is not exactly a surprise. Last week, the German VEZG already took a step down by 10 cents. As a result, German prices were significantly lower than the Dutch ones. This situation did not hold, as Germany is an importing country. It quickly became apparent that Germany still determines the price of our pigs. The decline in the Dutch market mirrors the German declines directly.
This was already evident last week in the prices of slaughterhouses. Vion initiated the reduction with some caution. The largest Dutch slaughterhouse decided to lower the price by 2 cents. Other slaughterhouses saw this as a signal that it was time to push prices down. Virtually all slaughterhouses chose to lower their benchmarks by five cents from €1.97 per kilo to €1.92. Now that the reduction proved successful, Vion took a significant step down. In total, the company chose to lower its prices by 8 cents from €2.04 to €1.96. Additionally, the slaughter price of Compaxo is known. The company adjusted its prices slightly to the same level as two weeks ago, by 5 cents. This lowered their prices from €1.92 to €1.87. The prices of the other major slaughterhouses are not yet known.
Meat prices decrease significantly
The reductions are the result of various reductions in pig prices. Prices are under pressure over most of the line. Remarkably, compared to other prices, hare prices remain relatively stable. Additionally, belly and bacon prices also remain relatively stable. Barbecue parts like ribs, on the other hand, are struggling and have seen a significant decline in prices in recent weeks.
Measured across the entire carcass, prices have fallen the most since week 18. In total, the price that slaughterhouses receive on average across the entire carcass decreased by 2.96 cents. Add to that the fact that prices (with a correction) have been falling for the sixth consecutive week, and it is clear that after a spring with disappointing weather, pork prices have taken a significant step down. Since week 23, the average price across the carcass has decreased by 5.81 cents. The majority of the decline came in the last three weeks. Since week 26, prices have decreased by 5.69 cents.
Pork market still stable
The pork supply is still limited in response to the reductions. The number of pigs slaughtered in the Netherlands decreased from 276,000 pigs to 270,000 pigs. Strong attrition is therefore not yet an issue. However, it remains to be seen to what extent this will continue. The slaughter figures for week 27 and week 28 are not yet known. Now that the slaughter price reductions have taken a step further, it cannot be ruled out that pig farmers and traders decide to wait and see for a while.
Remarkably, the significant decline in the German market barely affected exports before the Dutch reaction. The export from the Netherlands to Germany decreased from approximately 15,900 to just over 14,400 pigs. Perhaps this gave Dutch slaughterhouses some extra confidence to make as significant a downward move as in the German market.
