Global supply keeps hog market under pressure

The Dutch hog sector is shrinking, but prices are not moving higher. European production is growing and continues to pressure the market. Dutch exports of market hogs and piglets are also falling sharply. Ample global supply is adding further pressure on prices. European exporters also face strong competition from Brazil. The persistently weak US dollar is making sales more difficult. This is according to a market analysis by RaboResearch.

Dutch production declines

Hog production in the EU27 and the United Kingdom increased. In the first quarter, production was 2.5 percent higher. Denmark recorded the strongest growth, at 8 percent. Poland, Spain and the United Kingdom followed.

The Netherlands, by contrast, recorded an 8 percent decline. The number of hogs slaughtered in the Netherlands also fell significantly. The decline reached 6 percent in the first 25 weeks.

This points to a tighter domestic supply of slaughter-ready hogs. The development aligns with the smaller Dutch hog population. According to RaboResearch, recent buyout programs are driving this decline.

Animal exports decline

The Netherlands exported 27 percent fewer market hogs in the first half of the year. The number fell from 240,377 to 175,858 animals. Germany remained the main destination, despite a 21 percent drop in exports.

Exports to Spain fell by 85 percent. RaboResearch links this decline to weaker demand caused by African swine fever. More than 358 infected wild boars have been identified in Catalonia. No outbreaks have been reported at commercial hog farms.

Dutch piglet exports also fell by 17 percent. Exports to Spain declined by 26 percent. Shipments to Germany fell by 8 percent and those to Belgium by 6 percent.

European supply pressures prices

The larger European supply pushed hog carcass prices down further. In week 25, prices were 27 percent below last year’s level. Piglet prices fell by 12 percent compared with last year.

European pork export volumes remained virtually unchanged through April. However, export value fell by 12 percent due to lower market prices. China remained the leading destination, but exports declined by 18 percent. Competition from Brazil and the weak US dollar also hinder European exports.

Rabobank.nl