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Germany, the EU’s largest pork producer, has been shut out of several major Asian markets after African swine fever cases in wild boars in September. This means that there is a surplus of pork on the continent, after the latest restrictions imposed in the context of the Covid-19 pandemic have caused restaurants to sell fewer schnitzels and cold cuts.
The price of pork in Germany is more than 40% below the March level, and carcass prices are at their lowest level since 2016.
Although many other European producers benefit from record pork imports from China, slaughterhouses in some countries also face export restrictions. The slowdown caused by the coronavirus has also contributed to the emergence of hundreds of thousands of unsold pigs on farms in Germany.
According to the German Association of Pig Producers, farmers are losing approximately 60 euros for each animaland some farms could go bankrupt without help from the emergency government. Max Green, an analyst at IHS Markit, says that although China absorbs large amounts of pork, not enough to maintain prices.
The European Union is the largest exporter of pork
Export restrictions in Germany mean that Danish farmers sell fewer young pigs across the border, where they are normally raised for slaughter. In these conditions, Danish slaughterhouses have to work weekends and hire additional staff to cope with the influx of pigs, says Jais Valeur, CEO of Danish Crown Group.
Rupert Claxton, director of consultancy Gira, says that supply and demand could take at least six months to balance. For its part, China has asked importers to disinfect all imports of frozen products, which will further complicate trade.
The covid remains unknown. It’s very difficult to strike a balance when things are constantly changing, says Rupert Claxton.
Sales may increase after restrictions are lifted and restaurants reopen
Demand for exports to Asia remains strong, says Jais Valeur. The US Department of Agriculture also forecasts that in 2021 pork consumption in the EU will increase by 1.3%, after reaching the lowest level in the last two decades this year.
Rabobank analyst Justin Sherrard also believes that the demand for pork may be less constrained in Europe compared to other foods such as chicken or seafood, which are more restaurant-based. and catering. However, prices could remain under pressure until sellers find new export markets or manage to increase demand in the retail sector.
