After having gone through a long lean period, the German pig feeders faced much better prices again over the past six months. With regard to the sow feeders, however, it took until last December for them to experience the change of direction. Even after a (passing) low had to be coped with at the beginning of this year, the situation now seems to be a very friendly one – which goes for pig feeders as much as it does for piglet producers. Venturing a prediction, one may suppose that, seen from the economical point of view, 2005 may be one of the better years.

How is the pan-European market going to develop over the next few months?
In Germany, accelerating structural changes at the pig farms will continue to go on. Last year, about 7 percent (or as many as 7 500) pig feeders gave up pig farming. As a consequence, a 1 percent decrease was noticed with regard to pig stock figures compared to the previous year. Breeding sows in particular was observed to decrease in numbers by 4.3 percent. Hence, pig stock most probably may be suspected to continually decrease this year.

The question remains to be asked whether or not this will result in decreasing pig production in Germany, too, depending on how the sows’ productivity and the average slaughter weight will develop.

Anyway, supplying the German market is not the one and only decisive factor for price developments. It is much more important to look at what development the extended EU- and the global markets will go through.

With regard to Europe, no standard image can be found at present. So, considerably extended production capacities will be observed this year in some of the 25 EU member states. Among those, you will find the Netherlands, where pig production had been reduced to a large extent over the past years due to the government’s quota allocation with regard to this issue. Despite this quota allocation, experts expect production to increase by 3 to 4 percent during the first six months of 2005.

Decreasing the pig stock has come to an end in Great Britain, too. A 3 to 5 percent increase is being expected by the experts for the first half-year of 2005.

But some countries within the EU will reduce their pig stocks and thus their pig production. Apart from Germany, this goes for Belgium and Denmark. The Danes seem to have recognized that, as a result of the lean producer prices which were kind of decreed by Danish Crown, not much profit may be made by pig fattening in their own country. Meanwhile, Danish pig feeders prefer to export their piglets to Germany instead of fattening them on their own -- they outsource pig fattening.

After many years’ time, a decrease in pig production is being expected by the experts in Spain. Although production costs are at a very low level in Spain, if compared with other European countries’ production costs, the marketing still is organized very poorly there. Given a 120 percent rate of self-sufficiency, big problems particularly arise in regions far from the market, resulting in bad prices mostly in winter when there are only few tourists in Spain.

Watching the further development in Eastern Europe remains quite an interesting issue. Our pig feeders were given good returns from fattening pigs last year due to the unexpectedly booming demand from Eastern Europe. No kind of nightmare visions whatsoever has become a reality (such as the glut of meat coming in from Eastern Europe, as many were afraid to experience). It’s doubtful whether or not Eastern European countries will be able at all to exports large amounts of pigs on medium-term.

Currently, Poland, for instance, is developing to be a net importer. Pork exports have clearly decreased by 25 percent last year, while imports have doubled over the same period of time. An almost 6 percent decrease in the latest pig stock figures was noticed in comparison with last year’s values.

Conclusion:
It is quite unlikely that an increasing number of carcass pigs on offer can be expected within the EU for this year. In case the demand for pork won’t drop considerably – which is what is most probable – the pig prices will remain on a stable level. You may conclude this from the new EU member countries‘ demand. It is expected that demand will rather increase there.

Looking at the further development of exports, you will find this another uncertainty factor. The German producer prices would certainly be effected negatively if, for instance, the Russians would think it right to close their frontiers for any reason whatsoever (as everyone knows, they are quite creative in finding appropriate reasons), or if another weakening of the dollar would have a weakening effect on Germany’s competitive position on the global market.

But at present, there’s no talk at all of weakening export. Otherwise, the Danes would never ever have been in the position last year to take the USA’s rank as the major pork exporter to the Japanese market.