COVID crisis and oversupply are crashing pig prices
Two months ago, pig prices in Spain were €1.55/ kg but that is just a distant memory now when pigs are sold at €1.27/ kg (-18%). There is a significant drop in pig prices in Germany as well (-10%), although during the summer season prices are normally inflated due to lower production and supply.
This is not the case in 2021 when restrictions imposed in front of the fourth wave of COVID-19 infections in Europe and oversupply resulted in Germany and Denmark have taken over the EU market.
"We are in the middle of summer when we can only hope the pandemic will give us a truce and we could see how some potential foreign and domestic tourists and thus stop the price from falling, something totally unusual for this time of the year. During July, packing plants, especially those in Catalonia and Aragon, representing 60% of total capacity, have stopped working for one day a week, hoping to recover those 5 days of work in August, but so far everything is at a standstill.
Spain's domestic consumption is low; exports, with China in the lead, stand still; Europe’s pork supply from Germany and Denmark continues to invade the market while a new wave of Covid-19 disrupts any chance of fast price recovery," observes Mercedes Vega, Genesus' General Director for Spain, Italy & Portugal.
Currently, Spain is the world's largest pork exporter to China and the trend to increase production is clearly based on the wish to capitalize on China's demand for pig meat. While environmental policies in Germany, the Netherlands and other important pork producers inside the EU have pushed down the national inventories, Spain continues to invest in large pig farms and slaughterhouses.
Production is becoming more and more efficient and recognized for its high health status. Processing capacity is also expanding in Spain, while Germany, Europe’s biggest pork processor, scales down. "With the entry of the Italian Pini Group in Binéfar (Huesca) this year, 24,205,930 hogs have been slaughtered from January to May compared to 22,937,711 in the same period last year, an increase of 5.53%. If we extrapolate numbers to one full year, we would be talking about around 60 million more processed hogs for 2021. The German Tonnies Group, the main European operator of pork meat, also announced its entry into Spain's pork market in Calamocha (Teruel)", added Mrs. Vega.
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