Pig prices above €1.90 per kg - for how much longer?

Pig prices in Germany/Europe have risen above €1.90 per kg - but have fallen worldwide - how long can this go on?

After initial difficulties in the more or less non-existent May barbecue phase, pig prices have now taken an unexpectedly sharp upturn. Although the recovery in demand also contributed to this, the decisive factor was the sharp fall in the live supply of pigs. German slaughter figures of more than 1 million head per week, which were common in previous months, are a thing of the past. Now the figure is just over 920,000 head per week.

The reduction in pig supply can be observed in all major production areas in the EU-28. At the same time, slaughter weights have also been reduced. The supply of pork in Europe is only just sufficient to meet demand.

Nevertheless, pork continues to be exported to third countries, albeit at a reduced level. After all, Europe is an export surplus area, albeit no longer as pressing as it was a few months and years ago.

Pig prices of over €1.90 per kg are a rarity. The question arises as to how long this price level can be maintained. It brings back bad memories of the previous year, when similarly high prices collapsed again relatively quickly in August/September 2012. Are we facing a similar development?

However, there are fundamental differences to last year. In contrast to today, the slaughter figures back then were around 1 million per week. Until the beginning of September 2012, however, export sales to Russia were quite brisk, with prices of over €3 per kg there. In mid-September, Russian pig prices slipped to below €2.50/kg, dragging European prices down with them.

At almost the same time, pig prices in the USA, the world's largest export region, fell significantly. In the competition for the most important import regions, Europe had little choice but to follow suit with some delay.

What is different today? First of all, there is no longer as much of an export-driven supply in Europe due to the declining slaughter figures. This will not change much in the foreseeable future, as the reduced number of piglets in recent months does not indicate a short-term increase in slaughtering. For this to happen, sow husbandry must first be boosted again in conjunction with increasing piglet numbers per sow and year. Experience shows that this will take almost a year.

Nevertheless, the question arises as to how strong the influence of the comparatively low prices in the importing countries will be on domestic prices in view of the reduced flow of export sales to third countries. Although it is mainly less valuable cuts with a lower weighting for the payout rates that are exported, a limiting effect of the price potential can be expected in any case.

There is also the question of how strongly consumers will react to the higher consumer prices. So far, comparatively little of the increased producer price level has reached the retail level. Experience shows that this takes up to six months. Price elasticity is usually comparatively low.