We continue to be immersed in the global crisis regarding the prices of raw materials.
We usually follow different global indicators that maintain correlation and mark the trends between them and that have their consequences in the evolution of the prices of raw materials for food.
The world is out of place with transport flows changed and a total imbalance of available containers, this lack of availability forces to pay up to 5/6 times more than before the pandemic, so the impact on the cost of transport will be transferred to the entire supply chain.
In addition, the price of intermediate goods in the industry soars 16% in one year and the records of the previous crisis during the housing bubble are doubled.
Oil has passed the USD 80 per barrel level and gasoline consumption remains very high. Meanwhile, the price of pork continues to decline in Spain and producer margins are already negative in most livestock species.
Most livestock species have a very long production cycle and, consequently, regulating production and supply to demand is also a long cycle and is what is happening now.
The beef and pork production industry, with long cycles, has its product absorption systems for inelastic demand in a normal situation, but now we are suffering a greater impact on demand volumes that will cause prices to fall temporarily .
This, added to a very complicated global situation of raw materials, with prices historically in the highest ranges, is literally squeezing the profitability of the livestock sector with practically no exceptions. We also add an energy surcharge with an impact of more than 30% year-on-year increase in feed manufacturing in Spain.
The livestock industry has been doing very well for some years and is prepared to endure a few months of tension, but we hope soon that demand and the situation of meat imports will stabilize, thus favoring the livestock sector.
Information Sources: Nutrinews