Mercedes Vega, General Director for Spain, Italy & Portugal
At the beginning of the year, looking at how our market was going, we observe that the prices were rising, but the truth is that we did not think that it could reach 2 € and here we are. In this week’s market, the price closed at 1.97€/kg live weight and we assume that this limit will be surpassed, a barrier that we would have considered impossible a year ago. This is due to the sharp decline in supply throughout the EU.
Also, in the rest of the EU, prices have been increasing significantly as a result of the decrease in herd sizes. As of November 2022, there has been a decrease of -6% in total and -6% in sows. This represents almost 650,000 fewer sows in one year in the EU, with the loss of census in Germany and Denmark being more than -10%. In Spain the decrease has been -1%. The number of sows in Spain has not decreased significantly, but the sector is being restructured and production is concentrated in larger companies.
According to data from Mercolleida, the drop in slaughterings in Spain has been 5% in January and in February it is expected to be about 10%. There is less supply, but the processing plants have the same capacity and need a minimum to maintain their structures and consequently costs. This has led to the import of live pigs from Northern Europe, the Netherlands and Belgium.
Because of this lack of pigs, piglet imports have shot up (between 25 to 30%), increasing the demand and consequently, the price of piglets has risen. With the decrease of the census in Holland and Denmark, which were the suppliers of the EU, there is a lack of piglets to fill the fattening farms.
Raw materials prices remain high but this increase in the selling price is increasing the profit margin.
It is difficult to predict how the market will evolve, the meat industry has been able to pass on the price increase to meat, but we do not know to what extent the consumer will be able/willing to pay this higher price.
This post was written by Genesus