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Beef
UK Beef

GB Cattle prices remain stable
GB Cattle prices remain stable In the week ending 28 October, the GB all prime average cattle price recorded a marginal decline on the previous week of 0.41p to 359.61p/kg. The latest quote is now 10.14p above year earlier levels. Estimated prime cattle slaughterings over the same period fell by 1% on the week to 31,700 head. It has been reported that available supplies are starting to tighten somewhat as animals are coming off pasture. Furthermore anecdotalpork plated
comments suggest that some processors may be increasing demand over the coming weeks.

Overall steer price fell by s lost 0.8p at 375.7p/kg. Heifer prices also declined on the week with the overall measure losing 1.2p and R4L carcase prices down by 2.1p to 372.6p/kg. Young Bull prices rose by 4.5p on the week to 338.7p/kg while those meeting R4L specifications rose by 4p to 350.1p/kg.

UK breeding herd declines
According to data released by Defra, there has been a slight decline in the UK breeding herd as at June 1st 2017. Both the dairy and beef breeding herds contracted by around 0.5% on the year. Despite the improvement, at least in the short term, in the dairy prices, the effects of the sustained period of low milk prices may continue to be felt for a while longer. Therefore the
dairy herd is expected to decline slightly in size over the next couple of years both in the UK and continental Europe.

Calf registrations have fractionally declined during the first eight months of 2017 compared to the same period last year

Irish Beef
Ireland beefs up its cattle production
At the beginning of the year, Bord Bia forecast an increase in the number of finished cattle supplies in Ireland of 100- 110 thousand head, or 6% compared with 2016, driven by an increase of 130,000 in calf registrations in 2015. Combined with little expected change in carcase weights, this could lead to an increase in export availability of 6%, to 565,000 tonnes (cwe). In 2016, beef available for export was 535,000 tonnes. In March the forecast for export availability in 2017 was revised down slightly from previous projections to 555,000 tonnes, which is still 4% higher year on year.

Year to date Irish cattle slaughterings (January – August), rose by 7% compared with the same period in 2016, although carcase weights have been fractionally lighter, according to data from the Central Statistics Office. Together this means beef production has totalled around 400,500 tonnes so far in 2017, just over 5% more than a year earlier.

International Beef
USDA forecasts growth in beef and Veal production
The latest outlook from the United States Department of Agriculture (USDA) forecasts global beef and veal production to rise nearly 2% on the year in 2018 to 63 million tonnes, with the US and Brazil accounting for half of all growth.

Within this, US production is expected to increase by nearly 3% to 12.4 million tonnes, as the US herd expands for the fourth consecutive year. Elevated supplies and relative weakening of the US dollar are anticipated to maintain lower prices, increasing competitiveness and boosting exports to Mexico, Canada, and East Asia.

Following major losses from drought last year, Australian herd regrowth has further contributed to the projected rise. Increased exports from Australia into the Asian market are suggested to offer renewed competition with the US, which is amplified in Japan, where tariffs on US frozen beef imports are increasing as Australia’s tariffs shrink.

Brazilian production is projected to rise 3% on the year to 9.7 million tonnes in 2018. Potential limitations resulting from allegations of unsafe meat processing earlier in the year are noted, although exports have seemingly recovered to near record levels since the scandal. South American countries currently dominate supply to China, which will be aided by expansion of the Argentinian herd and strengthening Uruguayan exports in 2018.

China, the world’s second largest beef importer, is forecast to account for 13% of global trade in 2018, with imports set to rise 11% in 2018 as a result of robust demand and stagnant production. Although US beef imports were re-enabled in May, shipments remain constrained in the short-term, following 13 years of blocked access in the wake of BSE concerns.

Global beef and veal exports in 2018 are expected to rise by 3% to almost 10.1 million tonnes, with demand in East Asia continuing to drive trade. Nevertheless, oil prices are likely to remain relatively low, which may hinder economic growth and potentially subdue beef demand in oil producing regions.

Lamb
Little change in Lamb prices.

During the week ending 1 November the GB liveweight NSL SQQ remain firm at 166.51p/kg, just a 0.5p fall on the week. The quote is just 0.28p above the same week last year. Daily prices have fluctuated throughout the week, with Wednesday 1 November recorded a price of 165.77p/kg.

Auction market throughputs remained firm compared to last week at 111.7 thousand head, however this is 10% lower than the same week last year. Cull ewe throughputs declined compared to last week by 2% and totalled 41.5 thousand head.

During the week ending 28 October GB deadweight NSL SQQ recorded a decline of 1p, to stand at 385.4p/kg. However, this is almost 9p higher than the same week last year. Estimated slaughterings remain firm on last week, at 278.6 thousand head.

Cull Ewe throughputs down on September
Cull ewe throughputs traditionally reach their seasonal peak in September and October, when producers refine their flocks for the coming breeding season. However, this year cull ewe auction market throughputs appear to have bucked this trend.

Auction market throughputs of cull ewes in September fell by 10% (18,700 head) on the year and 16% (34,500 head) on the month to 176,900 head. However, in July throughputs climbed by 12% (22,200 head) on the year to 205,600 head. Likewise, in August cull ewe auction market throughputs were 8,900 head or 4% up on year earlier levels at 211,400 head.

German imports rise.
Germany has a growing demand for sheep meat even though Germans have not traditionally eaten large quantities. The sheep industry is small with just 1.1 million breeding ewes, according to the EU Commission. Germany is only around 40% self-sufficient in production, so imports are vital as to meet consumer demand.

Germany has a similar annual production cycle as the UK, lambing early in the calendar year with higher slaughterings later on. Again, similar to the UK, high quantities of lamb are imported from New Zealand to meet Easter lamb demand. Very little sheep meat is exported from Germany, in the year-to-date sheep meat exports total just 4.4 thousand tonnes with much of this going to other EU countries.

Total sheep meat imports in 2016 were 40 thousand tonnes, the highest level since 2011, according to data from Statistics Germany. During the first 8 months of 2017 sheep meat imports were 4% (1.3 thousand tonnes) down compared to the same period last year, to 28.2 thousand tonnes. Quantities from both New Zealand and the UK recorded year-on-year declines. New Zealand reduced its market share while the UK gained, however New Zealand still has over three times as much market share as the UK.

Domestic production in Germany has remained stable for several years, while demand has risen, meaning Germany’s level of self-sufficiency is in decline. Domestic production in 2016 totaled 22 thousand tonnes. In the first seven months of 2017 production has totaled 12 thousand tonnes, the same level as in the same period in 2016.

Whether the UK can continue to gain larger market share will depend upon New Zealand production and also UK meat meeting the demands of the German consumer. UK lamb would also need to remain competitive on price in the German market place.

Pork

Pig prices UK

In the week ended 28 October the UK-spec SPP recorded another decrease on the previous week, falling 1.02p to 153.24p/kg. While this quote remains almost 9p above year earlier levels, this is the first time the premium over the previous year has fallen below the 10p mark since September 2016.

Estimated slaughterings edged 1% ahead of the previous week to 178.85 thousand head, which was also 2% above year earlier levels. Increasing supplies are likely adding pressure to prices at present. Accentuating this, carcase weights remained strong in the week, with the average for the SPP sample standing at 86.20kg. Although, this was marginally (60g) lower than the average for the previous week.

The UK-spec APP fell by 0.64p in week ended 21 October to 157.51/kg. This was the ninth consecutive week of price declines for the series, with the most recent figure now standing around 12p higher than year earlier levels. The gap between the APP and the SPP for the same week widened to 3.25p, as the as the SPP recorded a slightly sharper decline.

Pig prices EU

In the week ended 28 October the EU-spec SPP recorded another decrease on the previous week, falling 1.04p to 156.03p/kg. While this quote remains almost 9p above year earlier levels,
this is the first time the premium over the previous year has fallen below the 10p mark since September 2016.

Estimated slaughterings edged 1% ahead of the previous week to 178.85 thousand head, which was also 2% above year earlier levels. Increasing supplies are likely adding pressure to prices at
present. Accentuating this, carcase weights remained strong in the week, with the average for the SPP sample standing at 84.66kg. This is 1.6kg above year earlier levels, though marginally (70g)
lower than the average for the previous week.

The EU-spec APP fell by 0.66p in week ended 21 October to 160.36p/kg. This was the ninth consecutive week of price declines for the series, with the most recent figure now standing around 12p higher than year earlier levels. The gap between the APP and the SPP for the same week widened slightly to 3.29p, as the SPP recorded a slightly sharper decline.

UK Poultry – Poultry and Poultry Meat statistics (Defra for September 2017 compared to September 2016)

UK commercial layer chick placings were up by 13% to 3.1 million Chicks
UK Broiler Chick placings were up by 2.0% at 80.3 million chicks
Turkey Chick placings were down by 19% at 1.6 million chicks
Turkey slaughtering’s were up by 20.0% at 1.3 million birds
UK broiler slaughtering’s were higher by7.8% at 82.2 million birds
Total UK poultry meat production was down up 8.7% at 148.5 thousand tonnes.

UK Poultry
Market update
Analysis shows that fresh and frozen Poultry saw a 3.6% increase in the year ending 18th June 2017 compared to the previous year. In terms of volume, most poultry categories enjoyed a boost. Nathan Ward, Kantar World panel’s Director noted that within the past year, 2.7 million more shopping baskets contained Poultry as the versatility of this white meat makes it an easy go option. Sunday roasts are still a time-honoured tradition for Brits with whole Chicken sales the big-seller and Chicken breast sales a close second. A recent survey’ indicate that per capita consumption of Poultry meat in the UK went up from 36.1kg per person to 37.3kg per person per year.

Exchange Rate
The £ has remained relatively stable against the Euro during October and now stands at 1.13 (slightly down on September) This rise has been in part due to the political climate in Spain being unsettled due to the Catalan region pushing through a referendum on independence from Spain. The recent rate rise by the Bank of England has probably helped to maintain this though some (not all!) were expecting and hoping for a higher increase in the base rate. As always with the Euro / £ exchange rate the future is still uncertain.

Download the Nov Report 2017 as a PDF file

UK Beef

Prime Cattle Prices finish the year above year earlier levels

In the week ended 23 December, the GB all prime cattle measure gained 0.71p on the week, to 362.64p/kg, which is 6.42p and 10.58p above the 5 year average and the same week in 2016 respectively. During the week endingpork plated 30 December, the measure recorded further gains to stand at 363.89p/kg. The measure now stands 4.91p and 10.09p above the 5 year average and the same week in 2016 respectively. Estimated prime cattle slaughtering’s for the week ended 23 December totaled 29.5 thousand head, 0.2 thousand head above the previous week. During the week ended 30 December, estimated prime cattle slaughtering’s totaled 18.6 thousand head, 3 thousand head less than the same week last year.

The overall steer price has remained reasonably steady over the past two weeks, standing at 363.6p/kg for the week ending 30 December, while those meeting the R4L specification fell slightly to 375.5p/kg. The overall young bull price has performed strongly, gaining 4.1p over the past fortnight, to 339.4p/kg, with those meeting the R3 specification gaining 6.2p over the fortnight, standing at 362.7p/kg. The overall heifer carcass prices recorded a 2.3p gain over the two week period, to 366.6p/kg. Heifer carcasses meeting the R4L specification recorded a gain of 0.3p week-on-week in the week ended 23 December to 376p/kg, before falling by 0.9p week-on-week during the week ending 30 December, standing at 375.1p/kg.

The overall cow price performed strongly over the Christmas period gaining a total of 13.4p over the fortnight, to stand at 241.6p/kg in the week ending 30 December. Those cow carcasses meeting the –O4L specification gained 9p during the two weeks, to 266p/kg. Estimated cull cow slaughtering totaled 9.3 thousand head in the week ended 23 December, a similar number to the same week in 2016. During the week ending 30 December, estimated cull cow slaughtering totaled 5.4 thousand head, 0.9 thousand fewer than the same week in 2016.

Dairy cross beef calf number show no sign of slowing

There have been fewer dairy breed young cattle registered in recent months, as recorded in the latest cattle population data from the British Cattle Movement Service., which indicates higher prime beef supplies could be available in 2018. In part, this could perhaps be due to an increase in the number of dairy cows being put to beef bulls, producing a dairy cross calf. These calves are usually registered as beef animals due to the potential value difference between a dairy registered beast and a suckler registered beast.

Dairy cross registrations have been on an upwards trend since 2014 and currently show no indication of slowing. In 2016, dairy cross calf registrations totalled 583.9 thousand head, 10% (55 thousand head) more than 2015. In the first nine months of 2017 dairy cross registrations totaled 473 thousand head, 9% (40 thousand head) higher than the same period in 2016.

A dairy cross calf could be worth around £180 more than a pure dairy bull from the same cow which is equivalent to 2.28p/litre, according to the Beef production from the dairy herd manual which is part of the AHDB Better Returns Program. There is also the potential for dairy farmers to use sexed semen to optimism the number dairy female replacements and therefore, allowing them to put more dairy cows to beef bulls.

UK Beef imports increase

Last year the UK was the second biggest EU Brazilian Meat Importer behind the Netherlands as reported in the Meat Trades Journal there is a big Interest in a UK-Brazil Trade Deal, there is a lot of pressure being put on the government to complete a post –Brexit UK Deal trade the UK and Brazil

Between January and October UK beef imports were recorded at 223.4 thousand tonnes, according to the latest data from HMRC. In comparison to the same period last year, this is an increase of 4% (9 thousand tonnes). Total UK beef imports during October were 24.6 thousand tonnes, 9% (2 thousand tonnes) more than the same month last year.

 Beef imports from Ireland remained steady in the month at 17 thousand tonnes while UK imports from the Netherlands recorded a year-on-year rise of 22% (363 tonnes), to 2 thousand tonnes. Poland has beenrecording year-on-year rises each month since November 2016. In October this year UK beef imports from Poland totaled 1.3 thousand tonnes, 34% (331 tonnes) more than 2016. Poland now competes with some South American beef in the food service sector in the UK. Conditions in Poland mean there is a large amount of feed available and therefore production is expected to remain strong.

UK beef exports in the year-to October were recorded at 86.3 thousand tonnes, 4% (4 thousand tonnes) behind year earlier levels. During October, UK beef exports stood at 9.6 thousand tonnes, 2% higher than the same month last year. Exports to both Ireland and the Netherlands recorded significant rises to total 3.1 thousand tonnes and 2.6 thousand tonnes respectively. Declines were recorded in several of the smaller UK beef export destinations.

UK beef production between January and October was slightly behind year earlier levels with demand at a similar level throughout 2017 compared to 2016. Therefore a rise in imports is perhaps not surprising.   The key Christmas period is approaching, and estimated slaughtering suggest that domestic production maybe lower than last year, so it could be expected that higher year-on-year imports may be required to balance demand.

China, the world’s second largest beef importer, is forecast to account for 13% of global trade in 2018, with imports set to rise 11% in 2018 as a result of robust demand and stagnant production. Although US beef imports were re-enabled in May, shipments remain constrained in the short-term, following 13 years of blocked access in the wake of BSE concerns.

Global beef and veal exports in 2018 are expected to rise by 3% to almost 10.1 million tonnes, with demand in East Asia continuing to drive trade. Nevertheless, oil prices are likely to remain relatively low, which may hinder economic growth and potentially subdue beef demand in oil producing regions.

UK Lamb

Lamb prices finish 2017 strongly

During the week ending 27 December, the live weight GB NSL SQQ stood at 186.01p/kg, a rise of 8.56p on the week and 16.11p above the same week in 2016. Throughputs for that week stood at 56.8 thousand head, 33% fewer than the same week in 2016. Tight supplies during the week may have influenced the higher price. Cull ewe throughputs stood at 18 thousand head, 27% fewer than the same week of 2016.

In the week ended 3 January, the live weight GB OSL SQQ stood at 182.16p/kg and the live weight GB combined SQQ stood at 185.12, with throughputs standing at 110 thousand head which is 19% higher than the same week last year. Some of the higher throughputs could potentially be due to producers sending sheep forwards now that the Christmas period is over. Cull ewe throughputs were just 2% fewer than in the same week of 2017, at 30 thousand head.

During the week ending 23 December, the deadweight GB NSL SQQ stood at 400.4p/kg, almost a penny rise on the previous week and over 15p higher than the same week of 2016. Estimated slaughtering’s for the week totaled 228 thousand head, 13% fewer than the same week of 2016 and 10% fewer week-onweek. In the week ended 30 December, the deadweight GB NSL SQQ stood at 405.1p/kg, 16p higher than the quote finished in 2016. Estimated slaughtering’s for the week ended 30 December stood at 138.7 thousand head, 15% fewer than the same week of 2016.

Looking into the New Year, while it is typical for lamb prices to experience some seasonal upwards pressure, this may be tempered perhaps by reports of a high number of 2017 lambs held over. However, the high global sheep meat price and high prices in New Zealand could restrict supplies to some extent, which would also be supportive of the domestic price.

Sheep meat production in the year to date behind year earlier levels


In November, UK sheep meat production totaled 25.1 thousand tonnes, 3% (0.8 thousand tonnes) more than the previous month, according to the latest data from Defra. Sheep meat production so far this year now totals 258.3 thousand tonnes, 1% lower year-on year. 
The number of clean sheep coming forwards fell by 7% (88.8 thousand head) year-on-year, standing at 1,131.1 thousand head, although this is a 3% (32.7 thousand head) month-on-month increase. Ewe and ram slaughtering’s totaled 124.1 thousand head in November, 10% (13.5 thousand head) less than the same month last year. Compared to the previous month, ewe and ram slaughtering’s fell by 3% (3.3 thousand head). Cull ewe and ram numbers have been lower throughout 2017 compared to 2016.

Looking into the coming months, based upon the Defra June survey and Defra slaughtering data, it would appear, that the despite the largely favourable finishing conditions that much of the country has seen all summer, there are still a high number of lambs yet to come forwards. Therefore, we could see higher slaughtering’s recorded during quarters one and two in 2018 than previously forecast.

New Zealand Lamb

New Zealand lamb prices and production well up on the year earlier

During December, New Zealand lamb prices continued to be above year earlier levels, although they did record week-on-week declines in line with the seasonal trend. In the week ended 18 December, New Zealand deadweight lamb price stood at 663 cents/kg, a week-on-week decline of 8 cents but still 183 cents above the same week of 2016. This is the largest year-on-year premium so far this production season, which began in October. Therefore, while the price is declining, it is not as sharply as in 2016, perhaps partly due to the relatively high global lamb price.The difference between UK and NZ lamb prices for the week ending 18 December stands at around 51p. Historically the price difference has been above 100p and it is not uncommon for the difference to be a large as 200p during the first part of the calendar year. So although contracted volumes of lamb will still come to the UK, domestic lamb will be very competitively priced and may again deter higher levels of imports. New Zealand exports of sheep meat in November totaled 28.9 thousand tonnes, 39% (8 thousand tonnes) more than the same month of 2016. The value of the shipments in November totaled NZ$271.5 million, 71% higher than the year earlier. New Zealand exports to China in November totaled 14.9 thousand tonnes and valued at NZ$94.6 million, a substantial 118% (8 thousand tonnes) and 200% (NZ$63 million) increase on the same month of 2016. This is a reflection of continued high mutton prices in China. Should global market conditions continue into the start of this year, UK imports of sheep meat from New Zealand will likely repeat 2017’s pattern of lower volumes.

Pork

EU Pig prices soften

The EU-spec SPP (standard Pig Price) declined slightly (0.13p) during the week ending 6 January, standing at 149.65p/kg. The series now stands 1.59p below and 30.56p above the equivalent weeks of 2017 and 2016 respectively.

Estimated slaughtering for the week ended 6 January were at a similar level to the same week last year, at 141.5 thousand head. This is almost 40% higher than the previous week, reflecting the higher number of working days in this week. The previous week had 2 bank holidays due to the Christmas period whereas the current week only had the New Year bank holiday. Demand for pigs was good during the week, in part due to processors re-stocking from the Christmas week, with supply able to meet this demand due to the carryover from the short killing weeks.

Up until the last week of 2017, carcase weights had been declining week-on-week. Average carcase weights slightly rose during the week ending 30 December, to 84.72kg, an increase of 600g on the week.  In the week ended 30 December, the EU-spec APP (all Pig Price) fell 0.46p on the week, to 153.3p/kg, just 1.51p below year earlier levels. However, the current price is well above 2016 levels at this time of year. The gap between the APP (all Pig Price) and SPP (standard Pig Price) for this week widened once again, to 3.52p, reflecting the sharper decline in the SPP this week.

UK Poultry

Defra has confirmed that avian flu has been found in 17 wild birds in Dorset

It is the first confirmed finding of the virus in the UK this winter, and tests have shown it is closely related to the H5N6 strain that has been circulating in wild birds across Europe in recent months. This is different to the strain which affected people in China last year and Public Health England has advised the risk to public health is very low. The Food Standards Agency has also offered reassurance that bird flu does not pose a food safety risk for UK consumers. This is the first time avian flu has been identified in the UK this winter and while the disease does not represent a threat to the public, it is highly infectious and deadly to birds.  At present the EU and UK Poultry Market is stable, Turkey prices are coming back in line from seasonal demand.

Exchange Rate

GBP EUR exchange rate struggles to make headway as Eurozone unemployment falls

Even though Eurozone data continued to impress this failed to shift the Pound Euro (GBP EUR) exchange rate from a narrow trend on Tuesday. A sharp widening of the German trade surplus and a fresh dip in the Eurozone

unemployment rate were not enough to shore up demand for the Euro, even though signs still point towards another strong year for the domestic economy.  The mood towards the Pound, meanwhile, remained relatively muted in the wake of Theresa May’s rather anticlimactic cabinet reshuffle. As the Prime Minister’s fragile position was only further highlighted by the limited shuffle, and the refusal of some ministers to move, the GBP EUR exchange rate was unable to capitalize on the Euro’s bearishness.

Download the Feb Report 2018 as a PDF file

Beef

UK Beef

Cattle Prices Hold Firm

In the week ended 23 September, the GB all prime average price held firm at 373.73p/kg, a rise of just 0.36p week-on-week. This is plated beefalmost 20p above the same week in 2016. Estimated slaughterings rose by 3% during the week to 30.6 thousand head. This rise is potentially somewhat due to farmers starting to finish harvest and turning their attention back to their livestock.


Overall steer prices and those carcases meeting the R4L specification also held firm from the previous week recording only small rises. Steer prices for those meeting R4L specifications rose by 0.4p on the week to 388.7p/kg. The overall steer price recorded a smaller rise of 0.1p to 
374.5p/kg. After recording a fall the previous week, the overall young bull price increased by 2p, to stand at 352.4p/kg.


Beef production declines again

In August, beef production declined for the third consecutive month to 71 thousand tonnes, according to latest Defra data. The month-on-month decrease of 1%, meant that production in the year-to-date is around 1 thousand tonnes behind levels recorded during the same period of 2016.

A total of 157 thousand head of prime cattle were slaughtered in August, a drop of less than 1% monthon-month and on the year. For the third month in a row, cow slaughterings rose month-on-month to 49.9 thousand head. Compared to the same month last year this is rise of less than 0.5%. Calf slaughterings rose by 12% (900 head) on the month to stand at 8.2 thousand head for August. Compared to last year 18% (1,700 head) fewer calves were slaughtered.

Average carcase weights have declined overall coming in lighter than both last month but also the previous year. Prime cattle carcase weights dropped 1.5% compared to the same month last year, to 345.7kg.

As we move into the autumn months, historically although carcase weights decline, higher numbers come forwards for slaughter. These factors traditionally combine to push production levels up. Should the historic pattern repeat this year it can be expected that production levels will record month-on-month rises over the coming months.

Beef – EU

EU grabbing a slice of Global Beef trade

EU beef exports have expanded considerably in 2016 and 2017 with data for January-July this year indicating that they were at their highest over this period since 2011. In contrast, imports have been in decline so far in 2017. At the same time beef and veal production has been unchanged and so the improved net trade position has helped the EU market.

Such an improved net trade position can help improve the carcase balance for processors as imports are dominated by high value cuts, such as steaks, whereas exports are of lower value cuts. In the first seven months of 2017 the import price for fresh and frozen beef averaged €8,855 per tonne while the export price averaged just €3,396.

Exports of fresh and frozen beef in the first seven months of 2017 increased by 26% on a year earlier and up 45% on the same period of 2015. The positive position in 2017 was mainly the result of a more than doubling in trade with Hong Kong, Algeria and the Philippines. All the top ten destinations recorded increases to varying degrees except for Norway. The UK is one of the smaller, but still significant exporter, accounting for 9% of the EU total in the first seven months of this year.

The reduction in fresh and frozen imports in January-July can be mainly attributed to the fall for Brazil and contrasts with the previous five years of growth for this country. The meat scare in Brazil would appear to be impacting on trade and shipments have been well below those of a year earlier other than in January. In January-July the decline amounted to 28% and in April was as much as 55% and there has been little indication of a seasonal increase in its shipments during the spring/early summer when the steak market builds-up.

Lamb


In the week ending 27th September GB liveweight prices remained more stable than earlier in the month with a drop of just 0.43p week on week. This is 7.57p lower than the same week last year although is 3.29p above the 5 year average price. Over recent weeks the price has been dropping 
and some firmness experienced this week may be due to auction markets throughput falling by 7% week on week to 94,377.
During the week ending 23rd September GB deadweight prices fell by 16.8p. This is the second week in a row where deadweight prices have been behind the year earlier prices. Estimated slaughterings increased week on week by almost 1% to 270 thousand head.

Everyone wants a cut of EU sheep meat.

Changes in global demand for sheep meat are resulting in lower EU imports from the global market but increasing exports. The EU might be a small global exporter but countries such as Spain and the UK are finding new markets.

EU exports to the rest of the world have more than doubled year-on-year between January and July, to 17,100 tonnes. This is the second highest January-July total on record according to the latest data from Eurostat. Several established markets, such as Hong Kong, Jordan and Switzerland, imported more product from the EU. In addition a variety of new markets, led by the Gulf countries are taking increasing volumes. The largest increase was seen in shipments to the United Arab Emirates which were recorded at 1,400 tonnes, a near seven fold year-on-year increase

EU sheep meat imports during the first seven months of 2017 totalled 97,400 tonnes, a 16% year-on-year decline. A large part of this is due to New Zealand exports to the EU declining by 18% to 84,200 tonnes, In contrast to New Zealand, Australian exports have slightly increased. Between January and July Australia sent 7,600 tonnes of sheep meat to the EU, 8% up year-on-year. New Zealand and Australia have the largest market share of EU sheep meat imports.

Production within the EU has increased by almost 3% year-on-year during the first six months of 2017, to 353 thousand tonnes. Slaughterings were recorded at 21.8 million head a marginal increase year-on-year. This would imply carcase weights have increased including in the UK. With imports down, production steady and exports up, it is likely consumption is down.

Looking into the autumn months higher numbers of sheep are coming forwards in the UK and Ireland with the European Commission forecasting production to rise by 2% in 2017 compared to 2016, The question might be whether exports can continue to grow strongly and so absorb the additional production in the second half of the year. However with the EU playing the global export market more than ever before, global trends may weigh or support farmgate prices

Pork

Pig prices UK

The UK-spec SPP declined again in week ended 23 September, by 1.26p to stand at 158.16p/kg. This is the largest weekly decline recorded since February 2016 and returns this series to levels last recorded at the beginning of June 2017. At almost 20p, the gap between the current quote and year earlier levels is the narrowest since October 2016.

Estimated slaughterings declined for the third consecutive week by 1% to 164,500 head; a 9% decline on the year. Industry reports suggest demand for pig meat is relatively steady, which may have contributed to some of the decline in slaughtering.

Pig prices EU

The EU-spec SPP declined again in week ended 23 September, by 1.29p to stand at 161.04p/kg. This is the largest weekly decline recorded since February 2016 and returns this series to levels last recorded at the beginning of June 2017. At 20p, the gap between the current quote and year earlier levels is the narrowest since October 2016.

Estimated slaughterings declined for the third consecutive week by 1% to 164,500 head; a 9% decline on the year. Industry reports suggest demand for pig meat is relatively steady, which may have contributed to some of the decline in slaughterings.

Average carcase weights increased by 240g on the week to reach 84.26kg; the heaviest weight recorded since the end of February. In view of plant breakdowns in the previous week, as well as a fall in demand, the increase in weight is likely to be attributed to pigs staying on farm longer. While a seasonal increase would be expected at this time of year, the current weight is 2% higher than year earlier levels.

In the week ended 16 September, the EU-spec APP also continued to decline by 0.55p to 165.73p/kg; the lowest figure recorded since the end of June. Meanwhile, as a result of the larger drop in the SPP, the gap between the APP and SPP widened slightly to 3.40p.

EU breeding and finishing herds slowly moving up

Both the EU pig breeding herd and the total herd increased in the year to June 2017, according to provisional figures from Eurostat which cover 14 countries including all the major producers.

An increase of just under 1% was recorded in the total pig herd, while the breeding herd grew by just over 1% year-on-year. The significant improvement to pig prices and producer profitability, starting in the latter half of last year, seems to have encouraged some recovery in numbers following prior rationalisation of the European herd last year. But, with European pig prices coming under pressure at the moment, what might this expansion mean for the market moving forwards?

The overall modest increase in the breeding herd suggests that slaughterings should pick up towards the end of this year and into 2018, boosting the availability of supplies on the market. In the shorter term, higher numbers of finishing pigs between 20-110kg were also reported, driving the overall 1% increase in the total EU pig herd. While many of these pigs will have been slaughtered by now, this backs up reports of greater supplies coming onto the market in recent months. It also suggests throughputs will likely remain above 2016 levels in the short term. Interestingly, piglet numbers were slightly (<1%) lower than year earlier levels. However, given the increasing sow herd, numbers would be expected to have subsequently picked up.

Overall, the expanding pig herd could prove challenging for the EU pig market moving forwards. While strong third country exports were able to counter subdued domestic demand in 2016, the slower Chinese market has reduced export demand this year. As such, while tight supplies had been price supportive earlier this year, any expansion moving forwards could risk tipping the supply-demand balance. Developments in Spain and Poland, both major exporters, could be especially critical. As US production will continue to move up, at more competitive prices, the EU market may come under increasing downwards pressure in the coming months, with repercussions also felt here in the UK.

UK Poultry – Poultry and Poultry Meat statistics (Defra for July 2017 compared to June 2016)

UK commercial layer chick placings were up by 9.5% to 2.5 million Chicks

UK Broiler Chick placings were up by 5.8% at 82.1 million chicks

Turkey Chick placings were down by 15% at 1.8 million chicks

Turkey slaughtering’s were up by 27.4% at 1.2 million birds

UK broiler slaughtering’s were higher by10.5% at 82.5 million birds

Total UK poultry meat production was down up 17% at 153.9 thousand tonnes.

Turkey

The Turkey market has been strengthening due to the decline of the pound against the euro, Italian production is being severely reduced by a severe outbreak of Bird Flu in Northern Italy and the full implications of the contraction UK production starting to influence the supply options. Demand for Turkey to is expected to increase due to the return of UK schools and colleges and the run up to the festive Christmas period.

Exchange Rate – A temporary blip?

The £ has strengthened somewhat against the Euro during September and now stands at 1.14. This rise has been in part due to the political climate in Spain being unsettled due to the Catalan region pushing through a referendum on independence from Spain and also the general election in Germany which has seen the far right gain a toe hold in the make-up of the parliament. However it is felt by most economists that this rise will be short lived and the exchange rate is expected to fall back to somewhere near its August level of 1.08 during the next 6 weeks or so.

Download the Oct Report 2017 as a PDF file

Beef

UK – UK cattle prices have continued to increase throughout July. This continues the bullish trend that has been taking place in the GB cattle market since around the end of April. Overall, this means that prime cattle prices have now almost recovered to levels seen at the beginning of this year.

Official figures from June (July figures not yet available) have shown a 3% increase (at 161,400 head) of throughput compared to the same month in 2015.

This now means that, in the first half of the year, prime cattle kill numbers are just over two per cent up on the same period last year at 984,000 head. However, cow throughputs are up almost 11 per cent, or 30,000 head at 274,000 head. With carcase weights trending lower for much of the year so far, significantly in the case of young bulls, there has been an impact on production. In the first six months of the year, production is up three per cent, or 12,000 tonnes, year on year, at 445,000 tonnes.

North America – News coming from the US recently stating that they are preparing begin importing beef from the UK for the first time in 20 years will mean that UK producers will be gearing up to obtain the relevant accreditation in order to get there piece of the estimated £35 million pie. Although the ban is not due to be lifted until January 2017 it will mean that supply will begin to tighten as we approach the busy
Xmas period.

South America – As well as successful trade agreement negotiations with the UK, the USDA have also agreed a two way trade deal with Brazil meaning that the import ban imposed on the US in 2003 will be lifted within the next 3 months. This deal is set to significantly improve Brazil’s position on the international market. Brazil have recently over taken Australia as the biggest exporter into China (an increase of 75 so these developments will only cement their status as a global beef super power.

Trade Data for 2016 shows that Brazilian exports have increased by over 80,000 tonnes on the year, Demonstrating that South America is dominating the global beef market. Although Brazil is leasing the way, Argentina and Uruguay are also increasing significantly.

Europe – Europe is the most stable beef production region right now, with prices strengthening slightly, supported by steady exports, in particular to Turkey, despite ample availability of beef and low prices of competitive proteins. Also, it has been confirmed that Ireland have been given the green for the export of live cattle into Turkey. Primarily the focus will be towards animals under 1 year old and 300kgs.


Lamb

Following price rises in the past two weeks, which have been attributed to the fall in the strength of the pound, the price of live weight lambs has begun to follow a more normal pattern in the last week, and fallen.

In the week ended 20 July, market prices fell by 12p compared to the previous week, to 188.7p/kg. This remained 38p higher than the same week in 2015 as the currency situation remains more favourable to exporters, while supplies remain tighter than the same week in 2015. Prices are thought to have dropped in the week as they follow their normal seasonal pattern for this time of year. Declines were seen
throughout the period, with the GB SQQ on Wednesday 20 July falling by 5p to 185.7p/kg.

The fall in deadweight price seen in the past week has come despite a decline in the number of throughputs, with numbers coming to GB auction markets down 11 per cent on the previous week. This left numbers four per cent below the same period a year earlier.


Pork & Bacon

Slaughter numbers remained low throughout July which has continued to support the increasing price in pig meat. Market unpredictability has made it difficult for producers to balance carcasses which means there are a lot of deficits but also some surpluses.

As the weather remains temperamental and the BBQ season is yet to take hold. A result of this has meant that back prices have softened in recent weeks meaning increases in bacon prices have suddenly receded.  A recent press release from Danish Crown (one of Europe’s biggest pig producers) states that they are experiencing “weak summer demand” for a whole host of meat cuts and that they are exporting its pork at slightly lower prices and believes the “peak” of the summer has now passed.

However looking further ahead the continued Chinese import demand is predicted to support the global pig prices throughout the 3rd quarter of 2016.

Poultry

UK chicken production increased by 0.5% year on year to 72.8 million birds showing a strengthening domestic market. UK chicken meat prices have stayed firm throughout July and availability has remained stable due to the inconsistent weather we have seen so far this summer.

EU prices increased at the beginning of the month due to the value of the pound on the back of Brexit. However there have been some stability in recent weeks and prices are expected to level out throughout August.

Download the Aug 2016 Report as a PDF file