GERMANY, Bonn. Too little stimulus on the domestic market and China's smaller import demand are putting pressure on prices not only in Germany.
For weeks, pressure on producer prices has been felt in the slaughter pig markets in many countries of the European Union due to weak meat business. For a long time, the Association of Livestock and Meat Producer Groups (VEZG) in Germany resisted a further reduction in its key quotation - despite house prices at large slaughterhouses. Most recently, this was no longer successful. The unification price for slaughter pigs was reduced last Wednesday by five cents to € 1.37 per kilogram of slaughter weight. The VEZG reported that the supply available on the German slaughter pig market continues to meet only restrained demand. The pressure of major slaughter companies on pig prices could not be completely avoided in the new slaughter week.
At least Tönnies has subsequently abandoned its house price policy and will now pay the VEZG quotation again; other slaughterers are likely to follow. Although the live supply is smaller than last year, according to analysts, it seems to have increased regionally recently. The Interessengemeinschaft der Schweinehalter Deutschlands (ISN) spoke of a tight market, with pig marketing no longer running smoothly everywhere. In view of the devastating economic situation on pig farms, slaughterhouses and food retailers were called upon to "end the price squeeze." However, the main problem is still not the live but the meat market. In the EU, pork consumption this summer is not reaching the levels of previous years, according to experts, and important third-country exports to China have stalled badly. As a result, there is too much pork on the domestic market, which is pushing prices down there. Added to this is the uncertainty of market players in Germany about the further course of African swine fever (ASF) and throughout Europe about the development of Corona and Chinese exports, which is leading to buying restraint among meat customers.
The market weakness is also being felt in other EU countries. Vion in the Netherlands and Danish Crown (DC) in Denmark already paid lower prices to their slaughter pig suppliers early last week. DC now followed up with another significant reduction in the purchase price; it was cut by the equivalent of 5.4 cents to € 1.28 per kilo SG. As in Germany, this is the lowest level since the end of February. The EU market for fresh pork is still out of balance, the company reported. In addition to weak consumption and a lack of Chinese exports, removals from well-stocked warehouses probably contributed to this, DC said. With the end of the vacation season, however, there should be more activity in the market, but it will likely take a few more weeks for the market to settle down, it said.
In Austria, the meat market is also facing a summer slump, the Association of Agricultural Processing Producers (VLV) reported. The flow of goods was sluggish and the demand for slaughter-ready animals was manageable. Despite the small live supply, the authoritative VLV quotation fell five cents to € 1.59 per kilo slaughter weight. In Belgium, slaughter pig prices were also unsustainable, slipping between two and three cents per kilogram live weight.
The price of slaughter pigs in Spain also remained under pressure; however, at 2 cents to € 1.271 per kilogram of LG on Mercolleida, the discount was no longer as significant as in previous weeks. This may have been helped by the fact that many slaughter companies in the pig strongholds of Catalonia and Aragon have returned to a five-day working week, and the live supply is seasonally small with high temperatures. But in the meat market, declines in China exports cannot be offset by increased sales to other Asian countries, and pork demand is below levels of previous vacation seasons, according to Mercolleida. Recent stable meat selling prices on the domestic market are said to have eased the margin situation for slaughter companies somewhat.
In France, on the other hand, the quotation was able to hold at the level of € 1.345 per kilogram of slaughter weight, which, according to the Marché du Porc Breton, met with the approval of market participants. Only the Italian market seems to have largely decoupled from the development in the EU - the leading quotation there increased by 4.4 cents to around € 1.60 per kg live weight. The reason for this was the very small supply of slaughter pigs, which met with a demand for meat also supported by foreign tourists.
Across the EU, slaughter pig prices continued their slide in the week ending August 1. According to the Brussels Commission, animals in commercial class E were settled at an average of € 150 per 100 kilos slaughter weight among member states; this was € 0.95 or 0.6% less than in the previous week. The gap to the previous year's price amounted to about 32%. During the week under review, the sharpest reductions occurred on the Iberian Peninsula, with 5.9% in Spain and 3% in Portugal. In Denmark and Latvia, prices fell by a good two percent each.
The declines in France, the Netherlands, the Czech Republic and Luxembourg were somewhat more moderate, ranging from 1.3 to 1.6%. Slaughter pig prices in Austria, Germany and Estonia held their ground, with reductions of up to 0.3%. In the Scandinavian countries of Finland and Sweden, on the other hand, prices rose somewhat, by 0.2 and 0.6% respectively. Surcharges were larger in Italy, at 1.1%, and in Slovakia, at 1.4%. Lithuania and Poland reported slaughter pig prices rising by as much as 3.5 and 3.9%, respectively.