Pork market shows two faces

The European pork market shows two sides. On one hand, there is relative stability, directly as a result of Christmas. At the same time, we see that there is pressure on slaughter prices, which indicates that the pig market is preparing for a further decline. The European pork price continues to fall, but in week 49 the decline is much flatter. This is largely due to Christmas demand, which ensures that sales on the continent are reasonably good. However, over a longer period, the decline has been substantial. Since the peak of the market in June, the price has dropped by 23.2%. On average, the market is quite stable, but this does not tell the whole story. If you look broadly at the trends in major producing countries, a market preparing for a further decline is revealed. This is most directly observable in Spain. African swine fever in northern Spain remains the main reason for the decline. The price has once again dropped by 10 cents this week to €1.10 per kilo. Thus, the price has reached its lowest level since the war in Ukraine. The price pressure also affects the Northern European market. In Northern Europe, Dutch prices are clearly the lowest. Vion has lowered the pork prices in recent weeks to a level of €1.30 per kilo. In Germany, prices are more stable. A gap of no less than 30 cents has emerged between the Dutch market and that of Tönnies, a difference of 23.1% in favor of the German company. Meanwhile, the price in Denmark is now 6 cents, or 4.6%, higher than the Dutch price. This is largely a result of the Chinese tariffs on European pork. Vion has been assigned the highest tariff, making it nearly impossible for the company to market pork in the country. The Netherlands bends, Denmark profits This also has clear consequences for the meat markets. Dutch meat prices are significantly lower than German and Danish prices, as shown by data from Eurostat. In week 49, the average carcass price in the Netherlands was €122.30 per kilo. The Danish price was a remarkable 36.6% higher at €167.09. Meanwhile, the German price is 39.3% higher, at a level of €170.42 per kilo. It is clear that Danish slaughterhouses have positioned themselves significantly better in recent months. In that country, pork prices are just above the Dutch level, while meat prices are just below the German level. This stands in stark contrast to the situation earlier this year, where the Danish market was constantly weakly positioned. This better positioning does not say it all, as the Netherlands requires a higher meat price relative to the pig price due to high wages in the sector. However, in relative terms, it is clear that the Dutch sector is struggling while the Danish sector is benefiting. Prices rise significantly Data from DCA, however, indicates that there is currently a trend reversal in the Dutch market, in line with the stabilization already observed EU-wide the week before. The recent increase of 2.24 cents per kilo in Dutch pork cuts prices breaks the downward trend of the past thirteen weeks. For that week, there was a decline of 18.65 cents over that period. An important factor is the usual Christmas upturn, where the price of the long haunch has already risen by €1.15 per kilo this year, almost equal to the increases in 2022 and 2023. Only in 2019 and 2020 was the price increase during this period even stronger. Moreover, strong demand from meat processors is expected to continue until January, especially because part of the industry remains in production during the holidays while slaughterhouses scale back earlier due to the late Christmas. This allows slaughterhouses to exert some pressure on buyers despite existing stocks, which explains the price increase for atypical Christmas products such as bacon and bellies. However, it remains uncertain to what extent this price increase will hold. Historically, prices for Christmas can go in two directions. Often, purchasing continues up to and including Christmas, but it is also not uncommon for sales to slump because all trading is done, leading to a decline.