European Pigmeat Prices in Upwards Trend

Prices on the rise in Germany and Spain

According to the EU Commission's Price Report from week 8 of 2022, the weighted average price of class S & E pigs rose 3.1% WoW to 139.6 EUR/100 kg carcass weight, which is a continuation of the upwards trend of EU pigmeat prices. As of week 8, the MoM increase was 5.1%, while the YoY increase was 0.4%. However, the increases are coming from low price levels, as the current price sits at - 8.3% below the five-year average between 2017 and 2021. Class S prices are the dominant class in the EU constituting 62.28% in 2020, whereas class E prices made up 29.79%.

Even more uplifting are the fresh reports from the German producer organisation VEZG, that week 9 index point prices for German pigs have risen EUR 0.18 from EUR 1.32 to EUR 1.50 owing to increased activity in slaughterhouses, which has strengthened demand for slaughter-ready pigs. The same situation is apparent in Spain, where insufficient numbers of slaughter-ready pigs are available and therefore trucks arriving from Belgium, Netherland, France and Germany have supplied Spanish slaughterhouses in an attempt to keep up with January’s record slaughter numbers. If prices in the countries supplying Spain increase, Spain is likely to experience a severe shortage as the price difference will no longer make up for transportation costs.

Further increases needed at slaughterhouses and in retail

Despite the German slaughter price increases, the relatively low prices and the record-high feed prices results in operational losses among most German pig producers, that will continue to run deficits if slaughter prices do not continue its current upwards trend, says market analyst Markus Fiebelkorn from Danske Svineproducenter to Landbrugsavisen. Pig333 reports that 90% of the Spanish price increases have been paid for by the slaughterhouses, as the prices of pork cuts have not increased in retail. Ultimately, the missing increases in pork prices set a cap on slaughter price-levels and soon slaughterhouses may experience circumstances similar to the pig produces with projected losses of up to EUR 0.10 per pig. This would be a heavy blow for the Spanish pig sector, which ranked as the EU's main pork producing nation in the EU in 2021.

The current concern for EU pig producers is the increasing input costs such as feeds, fertilizers and energy. Compared to the average 2020 prices, corn is up by 49%, soybean meal 46.2% and wheat 44.8% and these increases may well continue considering the current uncertainties surrounding the Russia-Ukraine conflict. As of now, transportation to and from Ukraine is at a minimum, while several international shipping giants have suspended all trade with Russia. Depending on the longevity of the conflict, the harvest of crops may be threatened later in the year. At the same time, producers such as Poland, Germany and Denmark are employing great numbers of Ukrainian workers. One week into the conflict, reports of workers who have left their workplace abroad for Ukraine, may create further labor shortages in the pig sector.