Little sign of EU pig market recovery
Growth in EU pig slaughterings is expected to continue until at least the middle of 2016, albeit at a slower rate than in the first half of 2015.
That conclusion is based on analysis of figures provided by the EU Commission’s forecast working group for pig, which met on Monday. Pig slaughterings are forecast to rise by around 2% year on year in the second half of 2015, with growth slowing to around 1% in the first half of 2016. In fact, many of the main producing Member States are forecasting that pig numbers will be little changed from year earlier levels. However, this general stability is set to be outweighed by further strong growth in Spanish output, although even this may begin to slow by the second quarter of next year.
These forecasts are broadly consistent with the EU Commission’s Short Term Outlook report, published last week, which forecasts a 2.7% increase in pig meat production for 2015 and a 0.5% rise in 2016. More details of the report’s forecasts can be found here.
The forecast slowdown in production is attributed to the impact which low prices are having on pig breeding herds. Herd reductions have not been as large as they might have been so far, however, partly due to low feed costs. Nevertheless, with the EU average reference price now having been below €1.50 per kg for over a year, finances are becoming increasingly difficult for many producers. The working group’s figures don’t offer much comfort for struggling farmers, with prices forecast to remain at or below current levels until the spring and, even then, only to show a modest seasonal uplift. This would leave prices only slightly above the depressed levels of late 2014 and early 2015. Prices may find some support if the proposed Private Storage Aid scheme is implemented but the extent of the impact will depend on its design.