Philippe Mallétroit – Director for France, Genesus
Hog price: price increases after a decline at the beginning of the year
In France the hog market price started the year at levels well above last year :
Hog market price (€ per kg carcass)
The average market price was 1.511 € per kg carcass for the months of January and February 2020, compared to 1.1735 € for last year at the same period, a difference of approximately 32 € per pig.
However, since mid-December 2019 and until early February 2020, the price has only dropped. Various reasons for this: January promotions to follow New Year holidays, social movements (strikes in ports)… Same observation in Spain and Germany where prices also fell before starting to recover at the end of January.
On Thursday 27th February the market price was 1.531 € per kg after having increased by 2.9 cts per kg compared to the previous market from Monday 24th February.
Hog price: the gap between France and its European neighbors
France and the rest of Europe currently benefit from an upward trend although the market is more saturated following the coronavirus epidemic which is spreading worldwide (130 infected people in France on the 2nd of March). This complicates the logistics towards Asia and China, whose demand for pork is still important, but also gound for uncertainties on the Italian market, heavily affected by COVID-19.
However, when we take a look at the price in France, we can see it is clearly below the two other main European pork producing countries. At the end of February, French hog price (without premium) was 1.531 € per kg carcass compared to 2.020 € per kg carcass in Germany and 1.522 € per kg liveweight in Spain.
The price difference is so big that some French producers we met recently already think of shipping live pigs to Spain or Germany in order to get a better price.
What can be the explanation for such a price difference?
Maybe it is due to the fact France is self-sufficient for pork meat? Probably not, because both Germany and Spain are self-sufficient too.
If we would to agree with this Spanish producer (540,000 hogs marketed per year) we talked to recently: “We are absolutely not worried, nor competed by France for the export market !” Maybe it has to due to a less strong an organized French pig industry capable to export pork in, particularly in China?
Any future for pig production?
Pig production continues to decline in Europe (Germany, Denmark, etc.) and in France, with the exception of Spain, which continues to expand.
However thanks to the strong Chinese demand following African Swine Fever, prices remain at a good price level, the average price of pork in France in 2019 reached its highest level since… 1992! Many French pig producers close to retirement continue their activity to take advantage of the good prices, or simply to make up for the deficit of the past years
No doubt that when Chinese demand will drop and prices will drop, many sow farms will close. A guy in charge to set up new pig farms projects in a cooperative told me than 1 out of 3 projects will be with sows and 2 out of 3 projects with only finishing. We expect than sow inventory and the number of pigs farmers will continue to decrease sharply in the coming years in France.
On the 28th of January, the French Minister of Agriculture, Didier Guillaume, presented 15 new measures in favor of animal welfare.
The main decisions will be the prohibition of piglets castration without anesthetic by the end of 2021, and the installation of automatic watering systems (including barns with liquid feed system) in all French pig farms. In addition, in the first half of the year, the legislation will be adopted to increase veterinary checks on long-term transport.
Let us hope that these measures will meet consumer demand, and especially allow producers to get a better price
Source : MPB, Ministère de l’Agriculture
Categorised in: Featured News, Global Markets
This post was written by Genesus