Pig sector struggles under Spanish pressure

The outbreak of African swine fever (ASF) among wild boars in Barcelona last week marks the pig market. At the beginning of this week, everyone tried to prevent panic and maintain calm as much as possible. However, the pressure on the supply chain has significantly increased in recent days. The meat market is full, and the decline in Spanish demand for piglets is becoming an increasing problem. The sector is preparing for a period where costs are not covered. The hope of many was that the agreement with China on a regionalization principle would help alleviate the price pressure that would undoubtedly arise. However, this seems to be increasingly vain hope. Many other countries closed their borders, which is proving unsustainable for the full European meat market. Stakeholders in the meat sector indicate that Spain is now offering cheap meat on a large scale and that this also impacts the pig prices in North-West Europe, especially in countries that are dependent on exports. Moreover, the collapsed Spanish pig price is creating significant pressure in the piglet market. Spanish export position of pork under pressure The impact of the issues on the pig market is best explained by illustrating the size of the Spanish export position. In 2024, Spain exported more than 1.3 million tons of pork to countries outside the European Union. Analysis of the destinations shows that around 40% (504,000 tons based on the volume in 2024) of this volume must now be sold in other markets due to current restrictions, and Spanish exporters are now also looking around in Europe. In 2024, the Netherlands exported about 494,000 tons of pork to countries outside the European Union. For a similar volume, other buyers now need to be sought, which is being done by offering the meat sharply to buyers. It is also certainly not the case that the supply to these countries consists only of by-products. According to Eurostat figures, two-thirds of this destination concerns more high-quality (processed) frozen pork products. Export volume Spain 2024 Volume in tons China (regionalization principle) 543,000 Taiwan 21,000 Japan 192,000 Philippines 186,000 Mexico 14,000 Korea 91,000 Prices down Slaughterhouses report that there has been a large supply of cheap meat from Spain in countries such as Poland, Italy, and Greece for several days now. Countries where the Netherlands also sells a lot of pork. The impact on prices was thus immediately significant on Wednesday. Dutch slaughterhouses reduced pig prices by €0.05 to €0.08 per kilogram of slaughter weight. It was surprising that German slaughterhouses remained unchanged. However, it should be noted that German slaughterhouses have become less export-sensitive, unlike their Dutch competitors who must valorize a much larger part of the carcass in other countries. However, it seems unlikely that German slaughterhouses will keep prices stable in the coming weeks with the current supply pressure from the south. None of the pigs offered were traded today on the German online market. A very small silver lining is the possibilities that may arise for Dutch slaughterhouses in distant destinations where Spain is now leaving gaps. However, sales to these destinations cannot be arranged in just a few days. Setting up new channels and relationships takes time but could provide some support for the Dutch supply chain in the long term. The Spanish pig price dropped yesterday to €1.10 per kilo live weight. In a few weeks' time, the price lost about €0.25 per kilo live weight, most of which occurred in the past week. Additionally, bonuses on prices seem to have disappeared, as can be heard in trade. Spanish slaughterhouses are therefore buying for at least €0.30 per kilo live weight cheaper than a few weeks ago. Piglet market is problematic The situation in the piglet market is also uncertain and fragile. The sales of piglets to Spain in the coming weeks are described as difficult by those involved. Whereas until recently some requirements were still placed by breeders regarding the last euros in price, this is currently no issue at all. Finding buyers and maintaining the flow of export piglets to Spain is the most important task. Buyers are also becoming much more selective in determining which piglet goes into the pen. Piglets from breeders that do not fit as well based on genetics, sex, or quality are even harder to sell. This year, about 50,000 Dutch piglets are being sent to Spain weekly. The expectation is that the sales situation will not improve this year, especially with the holidays and vacations ahead. Exporters are already looking ahead to next year and hope that Spanish integrations will want to take more piglets again once the situation has settled down and the consequences for the Spanish sector are clearer, although that will then be at a lower price. The Spanish piglet price was decreased yesterday by €5 from €31 to €26 each. It is noted that the long-term prospects for piglet exports to Spain were already somewhat more diffuse. Spanish pig farming is clearly producing more of its own piglets this year, and it appears that integrations primarily want piglets for the spring months. New contracts for year-round deliveries have already been considerably fewer, it is reported. Insiders also expect that after the traditional peak in spring, piglet exports to Spain may very well decline. This would be the first time in years. Meanwhile, those involved are actively seeking outlet in other countries, especially looking to the eastern neighbors. However, stable space is not readily available here either. Efforts are being made to piece together the 'piglet puzzle' again. Where possible, attempts are being made to place Danish piglets in Poland, so that there is room for Dutch piglets in Germany. Exports to further destinations in the east are being explored, but that is not easy either. Romania currently has enough of its own piglets, and Polish fatteners clearly prefer Danish material.