Pig prices rise again against expectations

Contrary to the expectations of some market participants, pig prices in Germany and the Netherlands have increased. Stronger meat markets have revived the market for pigs. A persistent risk, however, is that pig prices rise faster than meat prices.For a moment, market participants believed that Northern European pig prices would not be able to maintain their upward trend after two consecutive increases. However, this week another price rise has followed. Due to the tight supply, the market continues to move upward. For the third consecutive week, the VEZG quotation has increased by €0.05 to €1.60 per kilo. In the Netherlands, slaughterhouses are following the German increase. This means the price drop seen at the beginning of this year has now been fully offset. Due to significantly higher supplies, Danish Crown continues to quote its slaughter price at €1.21. As a result Vion's quotations are 12,4% higher. Meanwhile Tönnies' slaughter prices are even 28,1% higher.Lowest level since 2021 The quick recovery in pig prices confirms earlier suspicions that markets had overreacted in recent months. Chinese tariffs and the outbreak of ASF in Spain have definitely put the market under pressure, but the pricing turned out to be rather pessimistic even given these circumstances. Nevertheless, the German slaughter price is still at the lowest level for this time of year since 2021. In that respect, the market is still lagging behind compared to the last few years.A very important reason for the stronger performance is the firm Northern European meat market. The lower pricing has given pork a competitive edge in supermarkets, and sales have been relatively strong. As a result, prices for pork cuts have been correcting upward quite sharply.Pork cut prices have risen, but not as strongly However, one condition for the longer-term continuation of rising pig prices is that pork cut prices increase significantly, as in recent weeks the live market has been moving ahead of the meat market. An improvement in meat sales could provide additional support to the live market. Nevertheless, according to traders, pigs are currently being absorbed particularly well, despite the impact of the strike earlier this week.In the Netherlands, there is slightly more momentum in live and slaughter prices, as the effects of the shrinking market, resulting from large-scale farm closure subsidies (known in the Netherlands as LBV+), are becoming quantitatively visible. Pig slaughter numbers have taken a considerable dive and are down by 21.4% compared to the same period last year. The expectation is that this decline is largely structural in nature. This will create a significant challenge for slaughterhouses, as it is becoming increasingly difficult for them to utilize their full capacity.However, when we take a broader view of the market, we see that supply pressure on the Northern European market is not particularly strong. The German slaughter rate up to week 9 remained above the level seen a year ago. In Denmark, the slaughter figure up to and including week 8 was no less than 7.7% higher than the level of the previous year. This raises the question to what extent Dutch slaughterhouses will be able to increase prices more strongly than their Northern European competitors.