While the UK pig price continues to hold strong, prices across Europe are plummeting.
In the latest week, ended May 3, the EU average reference price (excluding the UK) dropped by more than 6p to 149.71p/kg. This compares with a recent high of more than 172p/kg in March and it is now at its lowest level for more than a year.
In contrast the UK SPP has remained remarkably stable in recent weeks, standing at 164.3p in the week ended May 9, its highest point so far this year and 21p up on a year ago. The SPP has remained in the 162-164p/kg range all year.
But across much of Europe, despite some easing of lockdown measures over the past few weeks, the market for slaughter pigs has become ‘increasingly challenging’, according to AHDB analyst Bethan Wilkins. “Reports indicate demand is difficult both on the domestic and export markets, even though pig supplies are not particularly large,” she said.
Ms Wilkins has summarised the situation in various key EU pork producing countries:
Germany
Germany, the largest EU pork producer, is the primary destination for British cull sows and supplies approximately 12% of UK pig meat consumption.
- Market reports indicate that slaughterhouses are now cutting throughputs. In week ended May 3, weekly slaughter estimates were 6% below last year, according to AMI. It seems a backlog of pigs is building.
- National VEZG pig prices are dropping. In week ended March 29, the price was €1.89/kg, compared €1.60/kg (-15%) for the week ended May 17 , with a drop of €0.10 in the latest week alone.
- The VEZG sow price also fell to €1.20/kg in the week ended 10 May, having been €1.53/kg in the week ended 19 April (-22%). This significant fall will also directly affect sow prices here. Reports indicate that sow throughputs in Britain have already been cut due to a lack of German demand.
- Measures to limit the spread of coronavirus have eased in Germany recently.
Denmark
Denmark supplies approximately 14% of UK pig meat consumption, but also receives 5% of our exports.
- The situation here is better than in Germany, with export demand to Britain and China reportedly stable, and even increasing in some other Asian markets. Pig prices in Britain are still just on an upward trend, which may offer some support to suppliers in Denmark.
- Nonetheless, national prices are still dropping. The Danish Crown price quoted for week ended 17 May is €1.74/kg, compared with €2.00/kg in week ended 29 March (-13%). A drop of €0.08 occurred in the latest week
- Denmark first started to ease “lockdown” measures in mid-April.
Ireland
Ireland supplies approximately 7% of UK pig meat consumption, particularly processed product and receives around 16% of our exports.
- Pig slaughter in Ireland is highly concentrated, with just two sites responsible for more than half of the slaughter. While processing has been able to continue so far, an outbreak in either of these plants would generate significant supply chain problems.
- Bord Bia report that pork demand in Ireland is mixed at the moment.
- Average grade E pig prices stood at €177.86/100kg in week ended 2 May. Prices have fallen by around €12/100kg since the end of February (-6%).
- Ireland has had a stricter lockdown measures than in the UK, and schools are not expected to reopen until September.
The Netherlands
The Netherlands supplies approximately 11% of UK pig meat consumption, and receives around 10% of UK exports.
- The Dutch pork market is reportedly faring better than Germany, with minimal difficulties in the number of pigs coming forward.
- Prices have already fallen sharply, however. The Vion 54% price was quoted as €1.65/kg for week ended 10 May, having been over €2/kg in mid-March (-21%). Some commentary has suggested the market may have reached the floor, with supplies now tighter.
- The Dutch lockdown was less strict than some other EU nations and is now starting to ease.
Spain
Spain supplies approximately 4% of UK pig meat consumption, and is a very significant EU producer and global exporter.
- Reports indicate the market is Spain is worsening. Although throughput has apparently been reduced, moving stocks of meat already accumulated is reportedly challenging.
- So far, falling pig prices are comparable to most other key EU producers. The Mercolleida price for week ended 10 May was €1.83/kg, compared with €2.05/kg at the end of March (-12%).
- Wholesale markets in Spain seem to be more severely affected than elsewhere in Europe though.
- Spain has had one of the strictest lockdowns in Europe. However, there are now plans to partially reopen schools from May 26.
Italy
Although not directly linked to the UK market in particular, Italy is a significant importer of EU pig meat in general.
- The situation in Italy is reportedly very bad, with processing capacity reduced by 20-30%, and cold stores filled.
- Ham processing is particularly stalling.
- Pig prices have collapsed; the 160/176kg live price had fallen to €1.15/kg in the week ended 8 May, compared with €1.60/kg at the start of March (-28%). Current prices are the lowest at this time of year since 2010.
- Italy has endured a long, strict lockdown. However, there are now plans to reopen bars and restaurants from 1 June.
Poland
Poland supplies approximately 5% of the pig meat consumed in the UK and is a net exporter of pig meat. The presence of African swine fever in wild boar and some domestic pig herds means it is unable to export to most countries outside the EU.
- Poland is more exposed to disruption on the EU market than most other key producers are, as it is not able to access the important Chinese market.
- Pig prices have fallen significantly. The Polish grade E reference price for week ended May 3 was €158.53/100kg, compared with €199.41/100kg at the start of March (-20%).
- Restaurants in Poland remain closed for the time being.