Following a slow start to the year, with limited market activity and neutral market sentiment for the first two weeks of January, the Mintec European Pork index has increased throughout the last four assessments. While the French and Spanish market sentiment was reported bullish throughout these weeks, the German market followed the upward trend across other key producers. Three (Spain, Germany, France) out of the four constituent countries of the index have indicated a bullish sentiment, with increased prices throughout the week.
The price increase has primarily been supported by declining availability, high input costs and uncertainty surrounding new animal welfare standards. All of these factors have led to a further fall in European pork production. According to the EU commission, EU production declined by 5% in 2022 compared to the previous year, to 23.6 million tonnes CWE. While this trend was seen across most of the EU’s top production countries, German production showed the largest decline. According to the German Federal Statistical Office (Destatis) in 2022, only 47.10 million pigs were slaughtered at the local slaughterhouses; this was 4.77 million or 9.2% less than in 2021. These statistics also include domestic slaughtering. The last time fewer animals were processed in Germany was in 2004. Within only five years, the supply of slaughtered cattle has decreased by 11.3 million pigs, or almost 20%.
Further support for the European pork market is coming from increased activity on the international markets. With European pork production still exceeding domestic demand, the international market remains a key focus point for the sales side, to avoid an oversupply situation that could be problematic for margins across the production line. Chinese authorities have started to reapprove several pork processing plants across the EU and North America for exports, which could indicate Chinese demand may return to the global pork market at some point in 2023. Although input cost drivers remain uncertain, the impact has declined lately as feed and energy prices started to fall in international markets.
While the other three underlying prices within the index increased, the Polish pork price decreased throughout the week. Domestic production is declining, but this was offset by a reduction in domestic demand and the lack of export opportunities, linked to export bans due to African swine fever (ASF) cases, which are still in place since last year.
For reference the Mintec Benchmark Prices (MBP) for Pig Deadweight Grade S EXW Europe [Mintec Code: BW56] was assessed at €2.01/kg on 7th February, up 1% on the week.