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Pig World
EU

EU reference price falls

Chloe RyanBy Chloe RyanAugust 2, 20172 Mins Read
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In the four weeks ending 23 July the EU pig reference price fell by €6.72 to €170.25/100kg the lowest price recorded for this series since mid-April.

The reference price started to decline in week ending 9 July, following 20 consecutive weeks of gains. Nonetheless, in the week ending 23 July, the quote remained above year earlier levels by €7.71/100kg.

According to AHDB Pork, it isn’t uncommon for EU pig prices to level off during the summer holiday period, before dipping in September. However, this earlier decline in pig prices could indicate a shift in the EU supply and demand balance.

It is well known by now that EU pig meat supplies have been relatively tight this year, with somewhat strong export demand for EU pig meat at the start of 2017. However, production is reportedly on the rise and forecasts suggest that output this year will be higher than 2016. Likewise, export demand for EU pig meat has steadied and is now falling on year earlier levels, driven by considerable reductions in Chinese demand, outweighing growing trade to other Asian markets. A combination of these factors is likely to have put pressure on EU pig prices.

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On an individual country basis, Germany, Denmark and the Netherlands all recorded prices drops on the four weeks ending the 23 July. However, the Spanish reference price continued to rise over the same time frame, by €3.55/100kg, driven by increased demand from the seasonal descent of tourists.

In euro terms, the UK reference price remained relatively unchanged in the four weeks ending the 23 July at €184.24/100kg. However, compared to the same period in 2016, the current quote is over €32 higher. With the gap between the UK and EU reference price at the highest level in nearly four months, UK imports of pig meat from the continent may have become more attractive. On the other hand, despite the weakness of sterling, exports of UK product to other EU destinations have become less competitive. Nonetheless, unlike other member states, shipments of UK pig meat products have remained relatively strong to China and other Asian markets. While demand for UK pig meat remains firm at the moment, prices could become under pressure going forward, driven by trends in the wider EU market.

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Chloe Ryan

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