June 16, 2010

While European pig prices are back by 3% on a year-to-date basis, there have been signs of improvement over recent months due to shrinking herds.

The four key producing member states, Spain, Germany, Denmark and France account for half of European production. Pork production for these countries combined was virtually unchanged at 3.16 million tonnes for the first quarter this year.

Since the second quarter of 2010, prices have improved in Spain, Germany and Denmark in response to lower supplies compared to the corresponding period last year. Prices have also risen on the French market, albeit at a slower pace.

The greatest drop in supplies has been evident in Spain reflecting the continued fall in breeding herd, with the latest November census showing a 4% drop at 2.4 million head. Spanish pigs marketed this year will fall considerably as the number of piglets recorded in the census fell by 7% to 6.6 million head.

Part of the reason behind some of the lift in Danish prices is linked to the strengthening live trade, especially to Germany where processing costs are lower, analysts said. Another factor helping the pork trade is stronger demand from outside the EU. The pig crop in Northern America (America and Canada) is expected by the USDA to fall by 3% to 35 million head this year.

Import demand from Russia for the first quarter of 2010 has risen by around 8% to 101,000 tonnes. Demand was slower from major Asian importers like Japan and South Korea to date this year. However this slight slowdown in trade has been offset by favourable exchange rate movements over the past few months for EU exporters into the Asian region.