Presently, the German and EU pig feeders face a well meaning pig cycle. Since mid-2004, the united price (called the Northwest price until the end of 2005) has steadily moved above the level of EUR 1.40 per kg slaughter weight (with the exception of just two or three quotations). It is true that by this the complete costs, amounting to EUR 1.47 per kg slaughter weight to be paid by the average German pig feeder, cannot be covered. But on average, the pig feeders at least stand the chance to have the fixed costs covered for the most part. However, with revenue like this gained from slaughter and with piglet quotations of around EUR 50, successful companies will certainly realise noticeable entrepreneurial profits.

So, how is the pig market going to develop?
This is the question to stir the pig feeders at no matter what time of the year. With the pig market being an independent market, this unavoidably depends on two criteria: supply and demand.

On the supply side, production may be anticipated to increase here in Germany. According to the latest livestock counting results, the number of pigs clearly increased by 2 percent compared with the year before. The fattening pigs were mostly concerned (plus 2.7 percent), but the overall number of sows was increased, too. This may be regarded as a token for the business situation to have bettered on many farms and for production to be expanded anew on many farms. Admittedly, we are not living on the Isle of the Blissful here in Germany, so we do have to take into consideration the other European countries’ situation when assessing quotations.

So, let’s take a look at Denmark, where – believe it or not! – as many as 6 percent less pigs were held on January 1st 2006 than were a year ago. This certainly is brought about by stricter environmental protection regulations as well as by substandard revenues gained from slaughter. The trend is reported to be slightly decreasing with regard to stock sizes from Spain (minus 1.3 percent), France (minus 0.4 percent) and the Netherlands (minus 0.9 percent). With the farmers being obliged to account for having enough grassland available and with the quota arrangements valid for pig keeping in these countries, the pig feeders are barred from expanding their production although prices are quite satisfactory. Even in Spain aggravating ecological problems arising in Catalonia, where large numbers of livestock are being held, result in the stock sizes to decrease.

Far less of a threat than expected was exerted on the European pig market from the East European countries. Instead, they rather proved to be much of an asset to the EU pig market, because increasing demand from those countries still releases the European market to this very day. And there’s no talk about massively increasing stock sizes in any of those countries – apart from in Poland. When comparing it with 2004, the Czech Republic, for instance, noted a 5.4 percent stock size decrease in August 2005. The situation isn’t much better in Hungary, where the figures decreased by 4.3 percent.

Competitiveness in Europe often finds itself weakened, with structures being too small and performance being too faint. Often, advantages resulting from lower labour costs are more than compensated this way. As was said earlier, the situation looks slightly different in Poland. Here, the latest livestock counting (carried out in November 2005) showed a clear 8 percent rise in stock sizes, having the number go up to 18.7 million pigs. A kind of boom must, in the first instance, be attributed to investors from abroad (Denmark and the Netherlands). It remains to be seen, however, how the situation will go on developing.

Altogether, the EU-25 gross pork production has slightly fallen in 2005 (minus 0.5 percent). Market experts say that an increase of around one percent is being expected for the first six months of 2006. This increase mostly is a result of what is going on in Poland.

On the demand side, the decisive factors must be looked for on an international level: As far as the weal and woe of the European pig prices is concerned, decisions will be taken on the international markets in 2006, too. In the foreseeable future, Russia in particular will continue to be a major country of importation buying pork from the EU. Brazil as Europe’s main competitor on the Russian market still reports about fighting foot-and-mouth on the one hand (which results in bans on imports in several regions); on the other hand, Brazil’s competitiveness is being weakened considerably on home soil by its strengthening currency.

Over the next few months, German exporters might be finding Asian countries ever more interesting for selling their products there. It’s a precondition, however, that the new Government attends to the missing veterinary contracts, as they promised to do. Low-value parts of the pig in particular (such as paws and ears) are being readily sellable over there at prices which seem comparably high.

As seen from today’s point of view, sales opportunities seem to be good for pork for another year, although any ban on imports possibly imposed on pork by the Russians or the Japanese might considerably stir the EU market. We’d rather go on keeping an eye on the USA internal price development, which has proven to go down for several months already which mostly must be attributed to the weakening domestic demand. The global market is represented quite well by USA prices; for this reason, all bad things will come to an end.

On top of that, it is an unpredictable issue how bird flu will go on spreading and to what extent it will interfere with the pig market. Reports from Italy, for instance, say that demand for poultry currently has decreased by 70 percent. For some time at least, poultry might be substituted by pork.

One thing is for certain: Things will remain enthralling on the pig market.