30 August 2022

2 minute read

By: Mercedes Vega

Europe

Spain has been beating, week by week, the historical record of its selling price, reaching 1.707 €/ kg live.

But not only are we breaking historical price records, but we are also in the hottest summer in living memory, causing the weight to continue to fall, standing at 106.16 kg, breaking the trend of recent years.

There is a lower supply and lower weights; this is causing 7 – 10 % less slaughtering than a year ago.

But, although raw materials have gone down, as we can see we still have very high production costs.

According to data from SIP Consultors, in the month of June the “break-even” could have been achieved and from then on in profits; but even being already positive, a very high cash flow is still needed to be maintained.

The situation of the processing plants is more complicated now because they need a higher volume to be able to cover their production costs (energy costs and full staff after the vacations). They cannot pass on the price; they have lost their margin and they need better prices to be competitive in the international market.

But in the rest of the EU, the picture is different. Prices have risen, but it is not covered the cost of production by the high-cost raw materials.

In conclusion, we can say

• Record price in Spain is 1.707 €/ kg live, and in the rest of the EU is rising.
• Raw materials go down, but still at very high values 433.42 €/ ton
• Demand is greater than supply, with less weight
• The increase in the price of meat cannot be passed on to the pieces.
• Meat consumption increases in northern Europe with the return of the vacations but does not cover the supply

In other years it was normal that, at the end of the summer, as the heat dropped, supply increased and prices fell. But this year has been different in absolutely every way. What is going to happen to the market? We ask ourselves the following questions

• Are we going to continue with the extreme temperature waves?
• How far has the census declined compared to last year?
• How far is inflation going to go? Declining purchasing power
• Large-scale commercial distribution will not accept price increases in order not to lose market share.
• International markets How and when will Germany be able to start exporting?

What is going to happen in terms of health? ASF?