Pork Prices in Spain Reach Multi-year Highs, Doubling the Price Growth of a Typical Cycle

Pork prices in Spain (Pig Carcass Grade S) averaged EUR 2.17/kg this May. This was their highest level since at least 2014. Year on year, prices are up by 14%. Meanwhile, Grade E pig carcass prices averaged EUR 2.11/kg, their highest level since 2013, up by 16% YoY. Finally, Grade R pig carcass prices averaged EUR 2.02/kg, their highest level since at least 2014, up by 18% YoY.

Pork prices markedly follow a yearly cycle, with valleys typically occurring during December-January and the peaks in July-August. Data from the last seven years for Class S pig carcass shows that prices typically grow 33% from valley to peak. But currently, as of May, not yet at their typical peak, prices are up 65% from the most recent valley, which occurred this last December. It's clear that at least half of that increase cannot be attributed to their cyclical movement.

Source: Tridge, European Commission

Some of the factors driving prices beyond their cyclical increases are the atypical increases in feed prices, which have soared since the start of the Russia-Ukraine conflict, and lower production than normal. Recent reports have noted a decline in pork production so far 2022 due to a Porcine Reproductive and Respiratory Syndrome (PRRS) outbreak sweeping through the country. This contrasts to 2021, which saw an increase in production.

These factors, along with firm demand, should continue to pressure prices upwards in the upcoming months, beyond the typical increases in the cycle.

Lower production could be also affecting export volume. According to ITC Trade Map data, Spain exported 564k mt of fresh, chilled and frozen porcine meat in Q1 2022. This figure represents a YoY decline of 8.5%. The vast majority of the losses (99%) came from China, which imported only 100k mt in Q1 2022 compared to 358k mt in the same quarter in 2021. These losses where mitigated by considerable gains from Korea, up by 24k mt to 44k mt, Japan, up by 24k mt to 49k mt, Italy, up by 24k mt to 53k mt, Poland, up 16k mt to 28k mt, Philippines, up by 13k mt to 30k mt, and several other countries. According to ITC Trade Map data, in terms of value, Spain was the largest pig meat exporter (HS code 0203) in the world in 2021, totaling $6.5 billion.

The dramatic decline in exports to China is mostly explained by the recovery in Chinese pork production and the resulting demand decline of external pig meat, after several bouts of swine fever which started in 2018 caused great losses to the pig population in the country. Nonetheless, the resultant net loss in Spanish exports could also be attributed to the aforementioned lower production numbers.

Source: Tridge, ITC Trade Map and European Commission