The Spanish pig price is at an annual low. For how long?

In November, we saw the rate of price decreases for Spanish pigs slow, eventually reaching price stabilization. The price fell for thirteen consecutive weeks (including a technical stabilization due to a holiday) going from €1.848 to €1.565/kg live: a total drop of 28.30 cents, representing an over 15% decrease. The bottom reached is comfortable for the farmer since it is situated comfortably above the cost price. For now.

The constant and successive decreases - gradual and without any sudden effect - have allowed the slaughterhouses to recover their margins substantially. The sudden price decrease in Germany (-8 cents/kg carcass) on Wednesday, October 23 has destabilized pork prices, which have been weak since then. Germany retains its role as the leading market in Central Europe and its movements inevitably drag down all its neighbors. The task now is to tackle the declines in pork prices.

With more margin and a more abundant supply, Spanish slaughterhouses have increased their production to record levels in the last two years, although they haven't reached 2021 levels when Spain broke all its production records.

Across Europe, calm prevails with markets in price stabilization mode. The Christmas season will cause an increase in consumption that can be satisfied without problems because the availability of pork is high. This increase in consumption will close the door to pork prices dropping; at least we think so. Slaughter is high throughout the EU; there is a lot of pork, but Christmas is always Christmas.

We are probably settled on a price predestined not to change until the end of January or the beginning of February. This year will be very good for pig farmers, better than expected for slaughterhouses, and less bad than previous years for processors. We can say there is a certain comfort for all the links in the chain.

As our readers know, Spain has been exporting over 50% of the pork it produces for a few years now. It is important, then, to understand what is happening around the world, especially what could affect our trade.

In a preliminary review, we will mention the following facts:

• Donald Trump's uncontested victory in the U.S. elections may result in the implementation of tariffs on both frozen meat and processed products. The candidate's electoral program specifically mentioned this. The United States is not currently a significant destination for Spanish exports, but everything adds up.
• The EU's final imposition of tariffs on electric vehicles produced in China will certainly provoke trade retaliation from the Asian country. It appears major Chinese operators are postponing the loading of confirmed contracts pending the final tariffs or rates. The Chinese government is looking for alternatives in South America.
• It is confirmed that Brazil is breaking all its production records, with exports at levels never seen before. In 2024, Brazil will have displaced Spain as the third largest producer in the world: the figures have yet to be finalized, but it is already a fact. Brazil will be a powerful competitor for Spanish pork. It already is, but its pressure will increase.
• Pig production in Latin America, in general, continues its productive progression: Argentina, Colombia, etc. continue to grow strongly, although they are starting from quite low total figures. It is only a matter of time before we find them competing with Spanish exports.
• The major American exporters (mainly the United States and Brazil) have seen the price of their pigs rise significantly. This will help make Spanish exports to third countries less complicated. In Brazil the pig price has risen sharply, coming very close to the Spanish price.
• At the EU level, the stabilization of the herd has been confirmed after several years of setbacks. The declines in Germany, Belgium, Denmark, and the Netherlands have allowed us to penetrate their areas of influence. It is a fact that Spain has increased its market share within European borders.

If nothing extraordinary happens, December and January are expected to be placid and calm commercially; no changes in prices are expected. The Christmas holidays will cause slaughtering delays (and a subsequent increase in average carcass weight), but this happens every year.

Let us mention that Spain has had record average carcass weights throughout the year; currently, the weight exceeds that of five years ago by more than 4 kg. A gradual increase in this figure has been observed and continues to be observed. Clearly, this is an established trend that is well-accepted by operators.

By observing the market behavior from the broadest possible perspective, we realize that there is an underlying movement that is altering the traditional price fluctuations of different pork cuts in Europe. For example, this year and the past three years collars have reached higher prices than loins for several weeks - something unthinkable just a few years ago. This distinct behavior is in part due to internationalization and trade contacts with nearly all global markets. Offal is highly valued in Asia compared to Europe. Progress brings change; our markets are not excluded.

Thomas Jefferson, the illustrious third president of the United States, once said: “It is neither wealth nor splendor, but tranquillity and occupation, which give happiness." So let's take advantage of the calm the market offers us to see if we can find that elusive condition.

Guillem Burset