1. Danish outlook improving
There were a few crumbs of comfort for Danish pig producers as the first quarter of 2015 drew to a close. Although the uptake of contracts under the recently agreed EU Private Storage scheme was lower than hoped for, DAFC felt able to revise their price forecasts upwards for the remainder of 2015, mainly due to the strong $, which will reduce the competitiveness of US pig meat in key export markets in SE Asia. Danish Crown and Tican members gave their overwhelming support for the planned merger between their companies, but high levels of piglet exports continued to put pressure on the availability of pigs for slaughter in Denmark.
More piglets exported
Following the difficulties experienced during the latter months of 2014, the continuing fall in pig prices seemed to have come to an end during March and April. The latest DAFC forecasts suggest a slightly improved picture, with the average price received by producers during 2015 expected to reach DKK 9.35 per kg, compared to previous estimates of DKK 9.00 per kg. The latest EU Commission forecasts also suggest that the recent growth in EU pig supplies will peter out as the year progresses.
Declining EU pig supplies forecast
During March, the EU-funded ‘Private Storage’ scheme for pig meat was introduced with a view to easing current market pressures. To date, a disappointing total of 47,000 tonnes has been placed in storage, with Spain, Denmark, Poland and Germany taking out the majority of the contracts.
However, the main reason for the improved outlook is the continuing weakness of the € against the US $. If this situation prevails, this will allow EU exporters a better competitive position against US competitors in the coming months. The new DAFC forecasts also assume that EU pig meat will remain excluded from the Russian market for the immediate future. If the current impasse is resolved, this may transform the EU pig meat market rapidly, even taking into account a much weaker rouble resulting from Russia’s economic difficulties.
At the end of March, Danish Crown and Tican stakeholders gave near unanimous approval to the plans to merge both companies. The Danish Crown Board of Representatives gave the proposals 100% support and 91% of Tican members did likewise. Formal announcements were published on both companies’ websites.
In January and February, pig slaughterings in Denmark increased to 3.3 million head compared to 2.9 million head in 2014.
However, exports of piglets continued at a high level and lack of availability of pigs on the island of Zealand was the key factor behind the Danish Crown decision to reduce the slaughtering capacity at the Ringsted abattoir.
Danish Crown also announced plans to expand their sow slaughtering capacity through a joint venture with Westfleisch at their plant at Schöppingen in North West Germany.