EU pork prices continue to climb at an unprecedented rate, with the EU benchmark price now higher than its UK equivalent.
Just a few weeks ago, in early February, the EU benchmark price stood at 108.7 pence/kg, against a UK benchmark price of 141.3 pence/kg, offering a UK ‘premium’ nearly 33 pence.
After gradual increases in February, the EU jumped 7p, 14p, 13.5p and 4p in March to settle at 152.3p/kg in the week ended March 27. This compares to a UK figure of 149.3p/kg for this week.
The most dramatic increase was seen in Germany, where after a long period of oversupply and rock bottom, the market turned around, with the German benchmark price rising from 107p/kg in mid-February to 164 .6p/kg. kg at the end of March.
In Spain, the reference price fell from 112p/kg at the end of January to 158p/kg at the end of March, while the Polish price fell from 106p/kg at the end of February to 156p/kg. France and the Netherlands saw notable increases, although the Danish price remained relatively low at 115.5 p/kg.
AHDB analyst Duncan Wyatt said: “Prices for all grades of pigs are rising sharply in the EU, from weaners to sows, perhaps starting to bring the idea of relief to producers of pigs from the whole block. The number of finished pigs is tighter and their prices are rising rapidly.
“However, prices are still far from the cost of production in most cases, and therefore very many growers will still face negative returns and cash flow problems. This follows the rapid and sustained increase in input costs, especially feed. It should be remembered that the costs were already high and increasing, even before Russia invaded Ukraine.
Private storage aid
In this context, as the pork supply is tightening, it may seem surprising that the European Commission has just launched a private storage aid scheme to eliminate the supply of pork from the market.
The Commission confirmed last week that applications can be submitted until April 29, for a storage period of between 60 and 150 days. Each request must relate to a minimum quantity of at least 10 tonnes for boneless products and 15 tonnes for other products
The Commission announced market safety net measures to support the pigmeat market “in view of the particularly difficult situation in the sector”.
This is part of a larger package to support EU farmers in the wake of the Ukraine crisis. The Food and Agriculture Organization of the United Nations (FAO) has warned that the world could “easily slide into a food crisis”, amid food shortages and soaring prices, the poorest countries in supporting the weight.
At least 50 countries depend on Russia and Ukraine for 30% or more of their wheat supply, with Ukraine responsible for 12% of global wheat exports, and there have already been massive increases in wheat prices. wheat, barley, rapeseed and sunflower oil. After Russia halted fertilizer exports, prices hit £1,000/tonne in March, up 200% yoy, as everyone braces for even higher energy prices .
The EU acknowledged the situation and on March 23 the Commission responded with a package of measures to “strengthen global food security and support EU farmers and consumers in the face of rising food prices and input costs.