How is COVID-19 affecting the pork and commodity markets?
The graph shown in the featured image presents the price of pork in different European countries (€/kg carcass weight). Source: IFIP from national data.
Pig market: price recovery interrupted, companies facing restrictions
At a time when European supply is stabilizing and Asian demand is strong, the key variables of the pork market favor high prices. However, logistical difficulties in accessing foreign markets and labor shortages in slaughterhouses are hampering demand.
After significant increases between January and February, European prices fell sharply in March, particularly in Germany and the Netherlands. German and Dutch prices lost 19 and 15 cents/kg respectively between the first and last week of March.
European slaughterhouses and processors are trying to stay active. However, organizing work crews is becoming increasingly difficult. Faced with threats of staff shortages and restrictions on movement, companies are running short on manpower. Germany and the Netherlands are particularly affected by this labor shortage as some employees from the East were not able to reach their workplaces before the lockdown orders were given. The significant drop in pork price is directly linked to these limitations.
On the other side of the Atlantic, the crisis caused by COVID-19 is also having a serious impact on the pig market. US slaughterhouses are starting to face the same staffing problems as in Europe, but their better conditions for accessing the Chinese market along with abundant supply is encouraging the US to increase operations further. However, companies are still dependent on labor from Mexico, which may be compromised by a lack of visas.
The COVID-19 epidemic is also affecting meat and live animal trade in Europe. The lack of truck drivers is increasing logistics costs. In addition, wait times at the borders are long, with additional paperwork.
On the export market, port activity is gradually picking up again in both Europe and Asia, after major disruptions at the beginning of the year. Lack of container availability remains a major problem, and freight costs have risen considerably. In addition, the world's major exporters, the United States and Brazil,are speeding up flows to China in anticipation of a potential halt in activity caused by the coronavirus.
Sources: pigs333.com (Professional Pig Community) and ifip Institute du Porc