GERMANY, Bonn. Slaughter pigs are in short supply in the EU. Pork, on the other hand, is in sufficient supply. The price increase is stalling in many countries.
The pig market in Germany and the European Union is split in mid-June. While the supply of pigs ready for slaughter is limited and they should actually become more expensive, the prices achievable on the meat market apparently do not yet allow this. Slaughter companies throughout Europe are therefore trying to prevent a further increase in producer prices at the expense of their margins. In Germany, the three major slaughter companies declared house prices at the beginning of June and did not follow the price increase of 3 cents to 1.57 euros/kg slaughter weight (SG) of the Association of Producer Groups for Livestock and Meat (VEZG) for "free pigs". However, the VEZG was not impressed by this last Wednesday and maintained unchanged its guidance quotation of 1.57 euros/kg. According to their information, the supply among their members is only 91 percent of the normal level and can be marketed without any problems.
According to analysts, the house prices had little effect as they only apply to non-contracted pigs, which can be diverted to other buyers due to the comparatively small supply. Pork demand has increased with the Corona loosenings and barbecue-friendly weather, according to market observers, but apparently has not yet reached the levels that would have occurred in the absence of a pandemic. Complicating matters now in the EU meat market is the fact that Chinese exports have stalled and more pork must now be sold in the domestic market, which German product is already pushing into because of the export ban in third countries. This is especially true in Spain, where slaughterhouses do not want to freeze the product on a large scale due to high slaughter pig prices. Accordingly, it was heard that fresh and frozen pork is increasingly offered from Spain, which hardly allows higher sales prices.
In Austria, the market was also described as bifurcated, with brisk demand for slaughter pigs meeting a "tough slog in the meat market." According to the Verband landwirtschaftlicher Veredlungsproduzenten (VLV), however, the meat market also fared differently: small and medium-sized companies, traditionally more focused on regional gastronomy, were pleased with brisker business, while export-oriented large-scale companies had to move more goods into frozen storage due to sales problems. The VLV quotation remained stable at 1.69 euros/kg SG, as did quotations in France and Belgium. Danish Crown (DC) also paid unchanged prices to its slaughter pig suppliers, reporting that the EU meat market "has not yet got off the starting blocks." Sales gains in the foodservice industry were roughly in line with the decline in the retail sector, he said. However, noticeably less pork was being sold in canteens due to home office work and at major events, which hardly ever take place, he said. DC confirmed that EU third-country exports were down and meat supply was increasing in the domestic market, making upward price adjustments difficult. However, the marketing situation was also "not critical."
In Italy, on the other hand, slaughterhouses have recently had to dig deeper into their pockets for slaughter pigs. There was no official quotation the previous week due to disagreement between producers and buyers, but prices rose on the market. Last Thursday, pigs in the weight range between 160 kg and 176 kg were quoted there at 1.44 euros/kg live weight (LG) in the unregulated market; this was 8.8 cents more than two weeks ago. Live supply in Italy clearly falls short of meat producers' needs, which made the strong quotation increase possible despite negative margins for slaughterers.
In Spain, too, the supply of slaughter pigs continued to be smaller than demand. However, because the price on the live market is already among the highest in Europe, slaughterhouses tried to slow down a further increase. In this they were successful, as the quotation on Mercolleida increased by only 0.3 cents to 1.553 euros/kg LG. According to Mercolleida, Chinese importers have not renewed expiring supply contracts for pork or have offered new contracts at much lower prices, which would be below the EU level for halves and equal to it for hams. Only in the export of offal could even higher margins be achieved than in the EU.
Across the EU, the previously more pronounced increase in slaughter pig prices had already leveled off in the week ending June 6. According to the Brussels Commission, the average price for animals in commercial class E in the 27 member states was 165.86 euros/100 kg SG; this was 0.59 euros or 0.4 percent more than in the previous week. The highest increase of 3.9 percent was recorded by Italian fatteners. Above-average price increases of around 3 percent were also recorded in Lithuania, Latvia and Romania. The increase was significantly lower in Austria, Germany, Portugal and Estonia, at 0.6 percent to 1.1 percent. According to the Commission, slaughter pig prices remained largely unchanged in most member states, including France, the Netherlands, Denmark, Belgium and Spain, even though the national benchmark price actually increased by around 2 cents/kg LG during the reporting week.