Falling prices in the EU
In the four weeks ending 21 July, the EU pig reference price declined by €3.89 to €174.27/100kg (£156.69/100kg). This is the lowest price since the mid-May.
Prices had been continuing to rise gradually amid supply tightness in Northern Europe. However, there were signs this might not be sustainable, with continuing reports of sluggish domestic markets and some slowdown in Chinese demand. Downward pressure is typically felt in Northern Europe during summer months due to the start of the holiday season. This year the situation has perhaps been compounded by the suspension of German exports to the Philippines at the start of July. Although, the Philippines only accounts for 3% of German pig meat exports.
In the UK, prices have continued to rise. In the week ending 21 July, the UK price stood at 152.29p/kg, 2.63p higher than four weeks ago. Although, there was a slight decline in the latest week. Converted to euro, the price is €169.38/100kg, with a smaller four-week rise of €1.65/100kg. Throughout July, sterling has increasingly weakened, as a no-deal Brexit seems increasingly likely.
The difference between EU and UK prices has been narrowing, falling below €5 in the latest week. Although the overall EU average has now been above the UK price for 15 weeks, this situation may not last long if recent trends continue.
Looking forward, it is possible the market will start to stabilise. The heatwave on the continent is further tightening supply levels. Market reports also suggest there is also some optimism for an improvement in Chinese import demand developing around the end of August.
On an individual country basis, price declines are apparent across the major northern EU producers. In Germany, the price declined by €7.43 over four weeks, to €180.65/100kg in the week ending 21 July. The Netherlands and Denmark also saw declines. The Dutch price fell by €7.18 to €158.34, whilst the Danish price fell €4.16 to be €169.15/100kg after a few weeks of stability.
In contrast, Southern European prices have seen seasonal rises as summer brings tourist demand. The extreme temperatures have also slowed production. Whilst other nations have seen declines, Spanish prices rose by €2.27 over the last four weeks to €181.12/100kg.