Drought in Russia: Grain region particularly affected
In Russia, the main region for grain cultivation has been experiencing dry conditions for weeks. This is likely to result in lower yields and poorer quality than previously expected.
Massive Stock Losses in the European Pig Market
The pig industry in Germany and Europe has experienced significant losses in recent years. From 2019 to 2024, German stocks decreased by around 25%. Poland and Italy also saw declines of about 20%. Overall, the EU-27 lost approximately 10% of its pig meat production during this period. The reasons for this structural break with regional variations are well known.
Challenges Faced by the Pig Market
Initially, the COVID-19 pandemic restricted demand and led to significant losses. This was followed by the Ukraine war, which brought high feed and energy costs. Some EU countries also faced increased animal welfare regulations. In the Netherlands, herd reduction is even supported by the government. In addition, the consequences of African Swine Fever (ASF) have caused export problems for Germany and reluctance to invest in pig farming in Eastern Europe due to the risky nature of the business.
Adaptation in the Slaughter Industry
It is positive that the slaughter and processing industry in Germany has reduced capacity and quickly adjusted to the new situation. Just seven years ago, around 1 million pigs were slaughtered weekly. Today, weekly slaughter numbers are around 700,000. This has led to shortages of fresh premium cuts in Germany, which are now being imported in some market phases.
New Price Level
What does all this mean for future pig prices? It is clear that the long-term average prices of between 1.50 and 1.60 €/kg carcass weight that were valid until the end of 2021 will not return. Since mid-2022, prices have been around the 2 € mark due to a tighter supply and increased costs that do not allow for lower prices. Whether it ends up being 10 cents more or less can only be determined after a cycle of three to five years.
Outlook for 2025
Aside from the medium-term cycle, the results of livestock censuses at the end of 2024 suggest that pig stocks in the EU will tend to decrease overall in 2025 despite high prices. The EU as a whole saw a decrease of 3.2% in sow numbers. However, there were regional differences in these trends.