Pig market shake-up in Northern Europe

The European pig market seems to have calmed down somewhat. Although there is still no guarantee that prices will remain low, the market looks better than in the previous relatively quiet phase of roughly a month ago. The ratios have shifted entirely. The European pig market has calmed down after the significant drop between week 37 and week 42. Last week, the price remained stable, and that was also the case this week. In Germany, the price has remained unchanged for the third week in a row. This is not a guarantee that prices cannot drop again, as this was the calm before the storm for a very significant reduction between week 39 and 41. A major difference with that period, however, is that then the pig market also remained stable while the prices in the meat markets continued to fall, and this time the meat markets have actually made a slight upward movement. Last week, it was already heard in the market that the substantial price reductions have resulted in an increase in demand for pork. With the increase of 0.47 cents per kilogram of the average carcass price, that stronger demand can now also be substantiated numerically. Overall, there is consolidation, but the prices of bacon and liver have risen significantly. Bacon became an average of 6.67 cents more expensive and liver 8.33 cents per kilogram. All other parts remained at the same price. This again leads to a slight recovery in margins, resulting in fewer incentives to further reduce the prices of the livestock. Ballance shiftsDue to the relatively strong decline in the Dutch market, the ballence in the North European market has shiefted considerably. Germany remains the most expensive market, but the difference with the Netherlands has become particularly more pronounced. Around week 24, the difference between the prices of Vion and Tönnies was, for example, 2.9%. In week 42, this price difference has increased to 11.8%. Perhaps more striking is that the price of Vion has now fallen below the level of Danish Crown. Converted, Danish Crown paid out €1.53 per kilogram in week 42, compared to a price of €1.50 at Vion. This is remarkable, as Danish Crown has consistently maintained the lowest payout level among the larger North European players since the summer of 2021. Especially since the war in Ukraine, the difference was significant. When pig prices in Germany and the Netherlands were at their peak, the difference rose to 28.3%.Over suply casues the shiftThe shifting relationships are the result of a plentiful European supply. Although meat demand has been weak in recent years, the sharp contraction in pig supply at the time kept the market balanced. This year, however, production has recovered, putting heavy pressure on Dutch prices since the summer. As a result, Dutch and Danish prices have been almost identical since week 27.Until the outbreak of the war in Ukraine, the Danish, German, and Dutch markets moved roughly in tandem. Occasionally, temporary gaps emerged between the players, but over time, these differences would even out and the balance would be restored. However, since the war began, this pattern has changed structurally. Denmark has lagged far behind the Dutch and German markets. Due to high labor costs in the sector and the weak export position of the market-dominant Danish Crown, Danish pig prices have remained well below those in the rest of Northwestern Europe. In general, Germany acted as the leading import market. Due to tight market conditions, the Netherlands — as an exporting country — managed to record slightly higher prices in 2023. But since 2024, a gap has opened up between Dutch and German prices, in favor of German pig farmers. This shift was driven by new market programs through which German slaughterhouses paid higher prices for pigs and piglets of German origin, causing exports to decline somewhat. A constant factor, however, has been that Denmark failed to keep up, with Danish prices remaining structurally much lower.