EU prices tumble on export woes
In the four weeks ending 2 February 2020, EU pig prices continued their fall, losing over €10 to average €182.54/100kg.
In late October, the Chinese government intervened to reduce wholesale pork prices. This involved releasing government stocks and encouraging imports. Reports suggest that this led to high volumes of pork in commercial store, which made moving volumes difficult. Import demand in the run-up to Chinese New Year was therefore dampened, influenced by these logistical difficulties.
After the holiday period, it was thought Chinese import demand would pick up again. However, the coronavirus outbreak led to an extended holiday period. Logistical difficulties, including temporary restrictions imposed on transporting meat between provinces, have reportedly delayed the delivery of imports.
Strong underlying market fundamentals remain. In fact, Rabobank now expect Chinese pork production to fall more sharply this year, as coronavirus delays restocking efforts. However, in the short-term, demand for imports could be negatively affected. Industry reports suggest pork demand, particularly out of the home, could be reduced. This may affect EU pig prices for some weeks. Although, in the latest week alone, prices were actually stable.
The UK reference price gained €2.35 during the period, to €192.04/100kg. This is largely due to some strengthening of the pound against the euro. The premium that UK prices now carry to the EU average continues to widen. For the week ended 2 February, it stood at €9.50, compared UK prices being discounted by nearly €3 four weeks before.
Selected individual EU nations recorded price changes as follows over the four weeks:
- Denmark +€6.39
- Spain: -€6.37
- Poland: -€10.66
- Germany: -€11.65
- Belgium: -€13.00
- France: -€17.00
- Netherlands: -€19.89