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Beef

Prime Cattle prices moving up

bistro food food plating

The deadweight cattle trade showed an increase for the third consecutive week in week ending 15th April 2017. The GB all prime average gained 1.6p reaching 346.5p / Kg. The price is now 33p/Kg more than the equivalent week in 2016. Prices have risen in England, Scotland and Wales.

Taking the overall GB averages, all categories of prime cattle showed similar increases of 1.7 - 1.8p per kg last week. For steers meeting R4L spec the price rise amounted to 2p to reach 358.5p although for heifers with the same spec the price rise was only 0.5p. In spite of the smaller increase last week compared with the previous one the GB young bull price at 323.0p per kg was at its highest since the first week in January. Yet the R3 price last week was still down 1.3p on the previous week at 336.1p. The cow trade eased back last week after four consecutive weeks of rising prices with the GB average down 2.1p to 227.2p with a 7.7p decline in Scotland contributing to this fall. Cow slaughtering’s also fell last week. Yet for cows classified as –O4L, prices moved up further by over 2p on the week in GB reaching 259.1 p/kg suggesting on going firm demand for those with ideal specs.

Demand for manufacturing beef remains steady including on the continent with EU cow prices continuing to move up. Throughputs were down however due to the Easter break. Demand for fresh Beef continues to hold up well with a good balance to the market. Volume purchases for Beef are up by 3% compared to 2016. In March, prime cattle slaughtering’s decreased once again on the year by 5%, to 160,900 head, according to latest figures from Defra. This was despite the extra working day this year, due to the early Easter in 2016. The majority of the reduction was driven by a 6% (3,800 head) decline in heifer throughputs, which stood at 60,000 head. Steer slaughtering’s also fell by 4% (3,200 head) to 86,400 head, while young bull throughputs declined by 6% (900 head) to 14,600 head. Calf slaughtering’s also declined in March by 11% (1,800 head) to 15,200 head.

Lamb

Liveweight Lamb trade lifts after Easter

Live weight old season lamb prices have increased in the past week as numbers have fallen back after the Easter weekend. In the week ended 19 April 2017, the GB OSL SQQ was 185.9p/kg, an increase of 6p compared to the previous week. Prices remain 4p above the corresponding week in 2016, however the later onset of Easter this year has boosted trade. The total number of lambs coming though GB auction markets were down 26% on the week, as expected with the Easter weekend. Following the bank holiday weekend, prices have lifted, with the GB OSL SQQ on Wednesday 19 April standing at 184.6p/kg. While live weight prices recorded an increase, the deadweight market took a diverging turn, with prices falling 5p on the previous week. In the week ended 15 April, the GB OSL SQQ stood at 412.0p/kg, narrowing the gap to only 2p behind the prices for this time last year. As expected with the bank holiday, estimated slaughtering’s were down by 18% on the week earlier, as many processors reduced their kill days. However, compared to the corresponding week a year earlier, estimated throughputs recorded an increase of 17%,predominantly due to the lead up to Easter.

Australia Lamb

Record prices for Australian Lamb look set to continue throughout 2017. MLA released their quarterly update of 2017 sheep and Lamb forecasts last week, all of which is not good news for abattoirs seeking throughput to minimise costs with a number of abattoirs having already closed or signalling production cuts in the wake of continued high livestock prices and reduced throughput. Lamb slaughter is expected to continue to contract further this year, revised down to further 500,000 head from original predictions to 21.5 million head for 2017 which is 1.5 million on 2016. Lamb production is expected to fall 6% year on year in 2017. Similar to Lamb slaughter, mutton processing is expected to contract further year on year with a 1.2 million head reduction to 5.8 million head for 2017. This all adds up to a downward revision for export forecasts with an expected drop of 7% in Lamb shipments.

Pork & Bacon

Pig prices UK


The UK- spec SPP continued to rise in week ending 15 April to 152.77p/kg, a week on week increase of 1.08p. Compared to the same week in 2016, the current quote is now over 41.5p higher. It has been the story for the past few weeks that tight supplies have been supporting prices and this remains the case. Likewise, anecdotal evidence suggests that the strong demand for UK pig meat is coming more from the export market, rather than domestically which is relatively subdued at the moment.
Estimated throughputs in week ending 15 April fell by 11% on the week and 20% on the year at 147,600 head. It is worth noting however, that there was one less working day in the week due to the Easter bank holiday, and this would have contributed to some of the fall in throughputs. However, slaughtering’s were still lower, by 9%, than in the Easter holiday week last year. Average carcase weights also continued to fall in week ending 15 April. At 84.83kg the current weight is 200g lower on the previous week. The average probe measurement fell again last week to 10.8mm the lowest level since March 2014.
In the week ending 8 April the UK - spec APP continued to rise, reaching the highest price for this series since October 2014. At 154.33p/kg the current quote is 1.34p up on the week and nearly 40p higher than the equivalent week in 2016. The gap between the APP and the SPP remains relatively stable at 2.64p/kg.K Poultry – Poultry and Poultry Meat statistics (Defra for March 2017 compared to March 2016)


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

UK commercial layer chick placing’s were up by 12% to 3.1 million Chicks
UK Broiler Chick placing’s were up by 9.3% at 82.7 million chicks
Turkey Chick placing’s were down by 5.5% at 0.8 million chicks
Turkey slaughtering’s were up by 38% at 1 million birds
UK broiler slaughtering’s were up by 3% at 76.3 million birds
Total UK poultry meat production was up by 7.2% at 137 thousand tonnes

Poultry

Wheat prices have been moving higher during April while Soya has gone in the other direction. The two have basically cancelled out in finished ration costs with the basic layers Ration easing back just £2.00 per tonne during April. UK average wheat feed gained £4.00 per tonne during March hitting £149.00 per tonne.

Avian Flu

The H5N8 virus still remains a threat to poultry and kept birds across the UK and keepers must still comply with strict prevention measures. However as from April 13th 2017 the Prevention Zone rules have changed which means all Poultry in England are now allowed outside as keepers are no longer required to house them or have total range netting in place.
The Euro has remained steady against the £ has remained relatively flat as it started and finished March around €1.165. There are signs of the £ strengthening against the Euro but it's anybody's guess as to whether it is the £ strengthening or the € weakening.

Currency

The pound strengthened recently against the Euro on the back of the announcement by the government of an earlier than expected general election called for June 8th 2017. From its low in mid - March of 1.13 it has climbed to 1.18 (April 26th 2017). While the future of Sterling against the Euro remains uncertain, especially with the looming French election, further advances may be made if as predicted, the Conservatives win the UK election with a massive majority.

Download the May Report 2017 as a PDF file

Beef

Prime Cattle prices on the up again

bistro food food plating

The rallying deadweight prime cattle market continued its trend again into the week ending 17 June, with price gains seen widely across all categories. Shortages of cattle are being reported as few grass finished stock are coming forward while numbers of yarded animals are in decline. Steers rose 4.4p on the week to 374.3p/kg. This price is now 39p higher than the same week a year ago. Young bulls rose 4p to 349p/kg. Heifers meeting R4L specification were priced at 373.8p/kg, again around 39p higher than a year ago after posting a weekly gain of 2.3p. The GB prime average rose by 2.85p, the biggest weekly gain since September to reach 361.68p/kg. Cow prices also rose for GB as a whole, albeit at a slightly more modest rate, 0.6p however trade north of the border show more substantial gains, of 5p.Estimated prime slaughterings were 32,600, up from last week’s number of 32,500, which has been revised down following the release of official Defra figures.

Cattle throughput picking up

Live weight Lamb trade lifts after Easter

Defra figures show that76,300 tonnes of beef and veal was produced in the UK in May, an increase of 5,200 tonnes over the previous month and 4% higher than in the same period last year. This takes the year to date total production to 372,100 tonnes, which is 1% higher than at the same point in 2016.Prime cattle slaughterings amounted to 172,900 in May, which is 11,300 more than in April and 10,500 more than in May 2016, indicating higher deadweight prices are now drawing out supplies. However, the average carcase weight for prime cattle so far this year has been 351.5kg, down by over 2.5kg compared with last year. Cow numbers too picked up with 46,300 coming forward, which is an increase of over 7% in May compared to April, however numbers remain 5% behind year-to-date. This underpinned the continued strong prices for such animals both in the UK and on the continent as dairy cullings fall away

Beef – Rest of the World

USA bans all fresh Brazilian beef imports

The USDA has announced the suspension of all fresh beef imports from Brazil due to “recurring concerns about the safety of the products intended for the American market”. This suspension will last until the Brazilian Ministry for Agriculture takes corrective action.

Brazil / South America


Beef exports from South America are dominated by Brazil but this country has not been without its problems in recent months. However, other exporters in the region have been increasing their trade so far in

2017 and largely offset the decline for Brazil. Brazilian exports were down by 8% or almost 24,000 tonnes in the first quarter of 2017 to 264,000 tonnes. In contrast shipments were up for Argentina, Paraguay and Uruguay with the combined total amounting to186,000 tonnes up almost 19,000 tonnes or 11% on the first quarter of 2016. The largest market for these three countries is China, which accounted for almost 30% of the total trade for the three countries in the first quarter of 2017.Paraguay also supplies Russia and shipments for the three countries combined to Russia, were up 59% on January-March 2016. All three countries also supply the EU to varying degrees and shipments were up 4% on a year earlier and amounted to just over 20,000 tonnes. Other South American exporters could continue to take market share from Brazil in the coming months, export availability permitting. However, the scope for increasing their trade is somewhat limited given that the beef industries in all three countries are much smaller than compared with Brazil. In relation to EU imports, Argentina, Brazil and Uruguay are the three largest suppliers of fresh and frozen beef accounting for around 75% of the total, although the UK takes relatively little. But whether developments in South America have implications for global prices including the EU remain to be seen.

India


India is the second largest exporter of bovine meat in the world with shipments of about 1.3 million tonnes last year. The Indian beef industry is largely based on meat from Buffalo (cara beef) and beef produced from culled dairy and working animals. The conservative Hindu Government has already banned the slaughter of traditional cows in a number of states and is now seeking to include Buffalo in the restrictions. The inclusion of Buffalo has the potential to severely restrict the output of the Indian Beef industry. If the ban were to be enforced this would obviously lead to a significant decrease in the amount of beef available in the market which could lead to higher prices. Most of India’s beef exports are to the far-east including Vietnam and Malaysia.


Indirectly, with India accounting for around 20% of global beef exports, a worldwide beef shortage could also have wider-reaching effects. Even before the ban was introduced Indian exports were reportedly down 10% in April. Further reductions are inevitable in May with major exporters reporting that there could be delays in meeting. orders. Redirection of some product towards the markets traditionally supplied by India, with the Chinese market especially critical, could leave gaps elsewhere in the world. If the problem continues and global supply tightens it could even benefit the UK beef industry. With India clearly torn between traditional Hindu values and economics, the future of its beef industry remains uncertain. The Indian beef market will therefore remain one to watch over the coming months and years.

Lamb


GB Lamb prices easing on Live weight but not deadweight and heavy Lamb


Liveweight lamb prices have fallen in the latest week as prices begin to come back from the recent highs which have been recorded at GB auction markets. In the week ended 21 June, the price fell by 12p compared to the previous week, leaving the measure at 225.5p/kg. Despite this weekly decrease, the price remains over 37p above the corresponding week in 2016, when prices were running at a lower level. The total number of spring lambs and hoggetts coming through GB auction markets amounted to 109,000, down 8% on the week. Reports have been suggesting that processors are seeking out heavy lambs, with numbers falling into the 45.6 –52kg weight category back by 15% year on year, as more producers are marketing their light lambs whilst prices are holding up. Since last Thursday daily prices have been tracking lower week on week, however the GB SQQ on Wednesday 21 June settled at 224.1p/kg, marginally up on the week. The deadweight market has bucked the trend which has been present in the live weight sector for the last two weeks. In the week ended 17 June, the GB NSL SQQ increased once again to reach 509.4p/kg. This weekly increase of over 5p resulted in the SQQ staying above £5/kg for the third consecutive week. When compared to the same week in 2016, prices for spring lambs are currently ahead by 97p. Estimated slaughterings were up on the week, by 6% as more producers are being drawn in by the strong price.


EU heavy Market take off


The EU heavy lamb market, including in the UK, has moved up sharply in recent weeks with shortages of new season’s lambs coinciding with stronger demand. Ramadan, which started on 26 May, with the festival of Eid on June 25 moves forward 10 days each year. This year it thus coincides with the time when the supply of lambs is especially tight in Northern Europe. At the same time, early lambs have finished somewhat later than normal because of the adverse spring weather.By early June the EU heavy lamb prices had moved up by 20%, to €543 per 100 kg dw, compared to early March. It was 5% higher than a year earlier. TheUK is by far the largest heavy lamb producer, and has a weighting of 50% in the EU price, and developments have applied equally to the UK.

Lamb Global

New Zealand and Australia

There is clearly a change taking place in the global lamb situation with supplies tightening and prices rising sharply especially in New Zealand and Australia. This in turn has contributed to the firmness in EU prices in recent weeks. There have been major shortages of New Zealand and Australian lamb on the EU market in 2017. EU sheep meat import data indicates a reduction of 20% on a year earlier. Similar developments seem inevitable in June given the further fall in New Zealand exports to the EU. The firming global market has also contributed to the increase in EU exports. They might still be small, at only 9,100 tonnes, but were up 140% on January-April 2016. Trade appears to be recovering to Hong Kong and was up 170% but there were phenomenal increases in shipments to the Gulf States of the Middle East. This market is normally dominated by New Zealand and Australian product.

As the rest of the year progresses it will be interesting to see whether the tightening global supply situation will continue to influence price developments and whether the EU price will remain above that of a year earlier. The seasonal decline in prices though has now started as supplies of new season’s lambs are building up but this will take time to filter through the supply chain.

Pork


Pig prices UK


The UK-spec SPP(Standard Pig Price –only concerned with standard Pigs)rose by 0.21p in the week ending 17 June to 159p/kg, as supplies have been reported to have further tightened. This price rise continues the rally that has recorded price levels not seen in three years, and more than 40p higher than the equivalent week in 2016.


In week ended 10 June, the UK-spec APP(All Pig Price –includes specific breeds such as freedom foods)recorded a rise of 0.45p to stand at 162.17p/kg. The increase in the APP was lower than that in the SPP, and so the gap between the two series narrowed slightly to 3.38p after having widened during the two previous months. The average probe measurement again fell, to 11.0 mm, and was down as much as 0.3 mm compared with a year earlier.


GB slaughterings confirm the tighter supply situation. For the week ended 17 June they were estimated at 161,100, down by 4,200 compared with the previous week’s figure, and the lowest throughput since Easter. Compared to a year earlier they were down by 6,600 head or 4%. Carcase weights ended the week at 84.20kg.

UK and EU demand for Pork decreasing due to high prices


Consumer demand for pig meat in key EU markets continues to struggle in 2017 and it is more export demand that is supporting the EU market. Fresh pork has been under the greatest pressure as processed products have held up better. What is happening to domestic demand in supporting the EU pig meat market in the coming months could be crucial as EU export markets are becoming more competitive especially China. Another issue for the sector is that increased finished pig prices are causing some retail pig meat price inflation. This is occurring at a time when consumers are having to tighten their belts as inflation is getting closer to real earnings growth in the EU.


The key German pig meat market has declined the most andby7% on a year earlier, for fresh pork. This is even greater than the 4% decline of 2016. The pork price rise, of 4%, was considerably higher than for other meats so eroding its competitive position. It is a similar story in other EU countries: In France consumer demand has dropped by 3%,in Italy it has dropped by 5% and in the UK it has dropped by 1.5%.The increasing pig prices with consequent increased retail pig meat prices will inevitably meet consumer resistance at some stage although processors margins have also had to fall. Such price developments would inevitably have consequences not only for the EU as a whole but also the United Kingdom.


UK Poultry –Poultry and Poultry Meat statistics (Defra for May2017 compared to May2016)
UK commercial layer chick placings were down by 21% to3.5million Chicks
UK Broiler Chick placings were up by 6.3%at 80.9million chicks
Turkey Chick placings were up by 4.4% at 1.0million chicks
Turkey slaughtering’s were up by 5.2% at 1.1million birds
UKbriler slaughtering’s were up by 6.6% at 79million birds
Total UK poultry meat production was up by 8.4% at 145.2thousand tonnes.


Poultry - Global Issues

The market is tightening up


Two more Poultry factories in Brazil have now been banned from exporting to the EU. The net result is that there is now a shortage of frozen Poultry on the market which is leading to more fresh poultry being purchased which in turn is leading to pressure on prices.


While Avian flu is by and large contained within the UK it is still a factor across Europe with some farms being quarantined and thus unable to put down new flocks which in turn means less raw product available. The summer trade across the EU along with the warm weather has increased Chicken sales especially for the BBQ trade. This along with several supermarket promotions is again putting pressure on prices. The high temperature has also caused more bird deaths and condemned Chickens with high micro tests. There is also increased demand for Poultry due to the current high prices on Pork as consumers look for a cheaper alternative protein.


In short there are increased demands and less raw material available to satisfy demand which is putting prices under severe pressure.

Foodservice Inflation

Foodservice inflation hit 9% in May, the highest level in nearly nine years, the latest CGA Prestige Foodservice Price Index has revealed. The rate of inflation is a significant increase on the figure of 5.8%in April. It is also more than four times as high as inflation in the equivalent Consumer Price Index, which measured 2.0% in May, according to the Office for National Statistics. It marks the sharpest inflation in foodservice prices since August 2008, and for the third month in a row, foodservice prices were higher year-on-year across all ten sub-categories measured by the index. The weak pound, political uncertainty surrounding Brexit and fluctuating oil prices have all added to inflationary pressures.

Currency

The pound has fallen recently against the Euro and now today stands at 1.13Euros to the pound. The pound has fallen since the General Election result which is a far cry from when the Election was announced when it stood at 1.20.

Cost Movement Report

The graph below shows the increases in the market prices of all raw products since 1stApril 2017. The graph clearly shows that raw material prices have increased and the forecast is for further increases over the coming months.

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Download the July Report 2017 as a PDF file

Beef

Beef - UK

 Cattle prices recoup losses

GB prime cattle prices in week ending 22nd July recovered the losses of previous weeks, with the all-prime average gaining 1.35/kg to reach 369.16/kg. However the picture across different categories of prime animal was mixed. Steers meeting R4L specification were unchanged at 382.5/kg while the average price of young bulls rose by 1p to 362.1/kg. The overall price for young bulls rose by 3.6p to 355.9/kg. Cow prices were also mixed in the same week. Carcases meeting O4L specification fell by 0.3p while overall cows rose by 2p to 255.9/kg. While demand for cow beef is expected to slow over the next 6 weeks, processors stocks on the continent are reportedly low. Therefore this is expected to keep demand stronger, partly contributing to the overall rise in cow prices. Estimated slaughterings of prime cattle rose slightly to 29900 on the week but this is still 3,000 less than July.

Beef – Global

Europe: Growth in Polish Beef exports stalled

Poland has emerged as a major supplier of low cost beef to other EU markets in recent years but there are signs that both production and export growth is now slowing down. Beef and Veal production growth amounted to 13% in 2014 and 2015 but slowed down considerably in 2016.This in turn is impacting on export availability and exports fell in 2016 by 2% to 405,000 tonnes. As the domestic market for beef is small in Poland with per capita consumption of only 2kg, developments in production have a strong bearing on the country’s export performance. Exports account for 80% of domestic production. The largest market for Polish beef is Italy followed by Germany, the Netherlands and

Spain. Assuming the past market growth in Polish beef exports has come to an end this could see added pressure somewhat on the EU beef market especially in those countries taking significant quantities of Polish product.

Lamb 

GB Liveweight lamb Prices fall but deadweight price holds firm.
original Thigh of Lamb

Liveweight lamb prices have fallen in the latest week by almost 17p on the week earlier to 191.66/kg which follows the usual seasonal pattern. However prices still stand at 10p higher than a year earlier. Throughput of spring Lambs have risen by 1% to 115,000 head. However throughputs compared to the same week last year are down by 2%. Large numbers of cull ewes continue to come forward with 43,000 head this week which indicates a rise of 24% compared to the same week last year. Hoggett throughputs continue to decline.

In the week ending 26th July, deadweight prices have remained consistent with previous weeks at 466.5/kg, a rise of 0.3p/kg. Compared to the same week last year the price now stands at 44.5p/kg higher. The deadweight market is holding firm, which could be due to global supplies of sheep meat being tight.


Lamb - Global

New Zealand 

Will Lamb Imports from New Zealand return to normal in 2018? EU heavy Market take off

So far in 2017, the UK has been the third largest importer of sheep meat in the world, while holding it’s position as the third largest exporter globally. Many UK farmers have concerns regarding the import of sheep meat from other countries, and competing against UK produced lamb. Some UK retailers are now making commitments to only sell UK lamb. Most sheep meat imported is from New Zealand. New Zealand recorded a 1% fall in lamb crop compared to the previous year, to 23.7 million head. This was a 63 year low for the country.

This year UK production has seen some unusual trends, due to the high number of old season lambs the UK had higher production during the early months of 2017. New Zealand has had a smaller crop, which combined with lower UK prices to mean exports fell back by 20% year on year. Using data from New Zealand Meat Board, between October 2016 and June 2017 throughputs have fallen by 6% to 19.88 million head compared to the same period in the previous year. This is possibly due to New Zealand farmers rebuilding their flocks after droughts in 2016, perhaps selling more stock earlier rather than fattening the stock in 2016. It is not expected that this will become the new normal trend.

Global demand for sheep meat is increasing. Demand in China has been growing over the last 10 years. Since 2006 Chinese consumption has increased by over 0.5 kg per capita alongside an increase in population. New Zealand’s peak exports of lamb to China was in 2014 at 158,174 tonnes. In 2015 export levels were similar to those of 2013. Over the last two years there has been a decrease in export volumes to China. However, China has also been producing more of its own lamb meat. So although there has been a fall in the quantity of New Zealand lamb going to there, it has increased its market share of China’s imports over recent years. However, in the first five months of 2017, China actually imported 6,000 tonnes more of New Zealand lamb than the same period in 2016 partly as New Zealand producers responded to lower UK prices.

In March 2017 New Zealand and China signed a trade agreement allowing New Zealand to ship chilled lamb to China for the first time. Initially this is a six month trial period for 10 production plants. The first shipment arrived in Shanghai in July 2017. Australia currently exports chilled sheep meat to China and will be in direct competition with New Zealand. If the trial is successful then a longer term trade deal may be negotiated.

Free markets will naturally balance imports, exports, and domestic production in order to meet both domestic and global demand. This helps maximise the utilisation of the carcase. In 2018 it is expected that New Zealand and British lamb production will to return to a more traditional pattern and in turn that imports and exports will too.

Pork

Pig prices UK

At 161.48p/kg, the UK-spec SPP reached the highest level since the series began in April 2014, for week ended 22 July. This followed from a modest increase of 0.23p on the previous week, which also left thecurrent quote over 33p higher than the same point last year.Estimated slaughterings increased for thesecond consecutive week, climbing 2% to

reach 162,000 head. However, this totalwas still 9% behind equivalent year earlier

levels. Nonetheless, reports suggest themarket is coming back into balance as the

traditionally more difficult summer periodapproaches. This, alongside some cooling

in the continental market, could impact pig prices in the coming weeks.

Average carcase weights gained 0.36kg in week ended 22 July, reaching 84.43kg.

The EU-spec APP also increased in week ended 15 July, adding 0.48p to the previous week’s record price to reach 164.71p/kg. This meant the gap between the APP and SPP widened again, to 3.46p

Pig prices EU

At 164.43p/kg, the EU-spec SPP reached the highest level since the series began in April 2014, for week ended 22 July. This followed from a modest increase of 0.23p on the previous week, which also left the current quote over 34p higher than the same point last year.

Estimated slaughterings increased for the second consecutive week, climbing 2% to reach 162,000 head. However, this total was still 9% behind equivalent year earlier levels. Nonetheless, reports suggest the market is coming back into balance as the traditionally more difficult summer period approaches. This, alongside some cooling in the continental market, could impact pig prices in the coming weeks.

Average carcase weights gained 0.35kg in week ended 22 July, reaching 82.91kg. This was also 1.5kg higher than the same week in 2016, as carcase weights dropped almost half a kilo in the week last year.

The EU-spec APP also increased in week ended 15 July, adding 0.49p to the previous week’s record price to reach 167.72p/kg. This meant the gap between the APP and SPP widened again, to 3.52p

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

UK commercial layer chick placings were down by 20% to 2.5 million Chicks

UK Broiler Chick placings were up by 8.1% at 81.6 million chicks

Turkey Chick placings were down by 4.1% at 1.2 million chicks

Turkey slaughtering’s were up by 2.4% at 1.0 million birds

UK broiler slaughtering’s were up by 7.6% at 80.2 million birds

Total UK poultry meat production was down by 2.9% at 131.2 thousand tonnes.

 

Poultry – Global Issues

EU:  Polish market tightening 

The Polish Office is predicting a shortage of Chicken from Poland during August. The EU supermarket promotions are expected to peak during mid- August which will mean less availability for the wholesale sector. Already some suppliers are pushing increases through due to the high retail demand and the low currency exchange rate.

The summer trade across the EU along with the warm weather has increased Chicken sales especially for the BBQ trade. This along with several supermarket promotions is again putting pressure on prices. The high temperature has also caused more bird deaths and condemned Chickens with high micro tests. There is also increased demand for Poultry due to the current high prices on Pork as consumers look for a cheaper alternative protein.

In short there are increased demands and less raw material available to satisfy demand which is putting prices under severe pressure.

Download the August Report 2017 as a PDF file

Beef

UK Beef Prices continue to Rise All market reports indicate that there is going to be shortage of cow beef putting huge pressure on prime UK cattle we are already starting to see sharp rises on a daily basis and as the weather improves I would expect to see a shortage of available UK product, prices will be higher than previous years and may hit record levels due to demand and an increase in exports. As reported in Farmers Weekly last year UK is only 60% self-nace june meeting 0046sufficient and there is a recognised need to import more product.


GB prime Cattle prices Continues to rise During the week ending 3 March, the GB all prime average cattle price gained 1.54p on the week, to 355.58p/kg. This is the first week-on-week gain since the end of 2017. Currently the measure stands 2.23p above the 5 year average for this week and 8.28p above the same week last year. Some of this uplift in price may be due to the snow across the country during the week as well as industry reports that demand may be picking up. How this price performs over the coming weeks will indicate if demand is starting to pick up.

Overall steer prices picked up by 2p week-on-week, standing at 355.9p/kg for the week ended 3 March, while steer carcases meeting the R4L specification gained 1.7p, to 367.4p/kg. The overall heifer price recorded a small increase (+0.9p) on-the-week, to 358.7p/kg. Heifer carcases meeting the R4L specification remained more stable (-0.2p), at 367.2p/kg. The overall young bull price declined 4.5p during the week, to 321.6p/kg, which for the first time this year is below the five year average. Those young bull carcases meeting the R4L specification however fared better gaining 1.4p, to 343.2p/kg, although this gain modest gain was on the back of a sharp decline two weeks ago.

Estimated prime cattle slaughtering declined sharply during the week which is not surprising considering the poor weather conditions experienced across the country. Total estimated prime cattle slaughtering stood at 26,200 head, an 18% (5,700 head) decline on the same week last year. Compared to last week estimated slaughtering declined by 20% (6,700 head). As the weather conditions have now improved slaughtering are likely to return to a more typical level for this time of year and therefore record a large week-on-week rise next week.

In the week ended 3 March, the overall average cow price continued to increase (+2.8p), to 255.8p/kg, while those cow carcases meeting the –O4L specification gained 3.4p on-the-week to 276.7p/kg. Estimated cow slaughtering stood at 7,000 head, a 31% (3,200 head) week-on-week decline. Compared to the same week last year, estimated slaughtering declined by 30% (3,000 head). In a similar pattern to estimated prime cattle slaughtering the number of cows slaughtered was most likely affected by the poor weather conditions. As recorded throughout the start of 2018, industry reports continue to suggest demand is in front of supply.

Price rises return for cow prices

In the week ended 24 March, the GB all prime average cattle price recorded the fourth consecutive week of rises, having gained 1.06p, to 357.65p/kg. The measure currently stands 14.21p above year earlier levels. Industry reports suggest some processors are actively looking for cattle to come forwards.

The overall steer price gained just over 1p during the week ending 24 March, to 358.6p/kg, while those steer carcasses meeting the R4L specification gained 1.4p, to average 369.6p/kg. Overall heifer prices gained 1p on-the-week, to 359.2p/kg, with those heifer carcasses meeting the R4L specification gaining 2.5p, to 369.7p/kg. Young bull prices once again proved they could be volatile gaining 7.7p week-on-week to 336.2p/kg, while those young bull carcasses meeting the R4L specification remained steady at 351.6p/kg.

Estimated slaughtering’s fell back by 200 head on the previous week, to 33,000 head, although were still 5% (1,600 head) up on the same week last year.

During the week ending 24 March, the overall average cow price increased by 1.8p, to 257p/kg. However, those cow carcasses meeting the –O4L specification fell back by 0.7p, to 278.2p/kg. Estimated cow slaughtering’s fell back on the previous week by just over 1,000 head, to 10,000 head. Industry reports continue to suggest that there is strong demand for manufacturing beef.

In the week ending 24 March 2017, the GB overall cow price was the highest it has been since July 2013, and even higher than the highest peak of 2017, which was seen in July. It is also around 25p higher than the five year average. The GB overall cow price recorded a sharp decline towards the end of 2013, and stayed there for two years. In 2015, poor milk prices saw UK slaughtering of cows increase. However, the removal of EU milk quotas saw some EU member states look to increase milk production despite the low prices, and in those countries there was no increase in the number of cows slaughtered. This increase in milk production following the removal of milk quotas put farm gate milk prices under further pressure, leading to consolidation and a renewed drive for efficiency in the UK dairy industry. Continued lower milk prices into 2016 led to higher cow culling’s in historic terms, weighing on the price for cows. Milk prices recovered during 2017, reducing the number of cows coming forwards, high supplies of cow beef on the European market post the cull of many Dutch dairy cows, which weighed on the price to a degree.
Compared to prices in other key European countries, the UK price typically has been one of the highest. French prices are higher, as cow beef is often seen as the preferred choice of beef in France. Since the EU referendum exchange rates have improved the competitiveness of UK cow, prices falling below Irish values.

UK imports less fresh beef in January and exports increase

During January, the UK reported imports of fresh/frozen beef remained at a similar level to January 2017, at 21,600 tonnes, according to the latest data from HMRC. Ireland shipped 15,200 tonnes to the UK, again a similar amount as year earlier levels. Although the amount received in total was similar, what has changed is the make-up of the types of product. Around a third of beef imported into the UK in January 2018 was frozen, totaling 7,500 tonnes, 25% higher volume year-on-year. The volume of fresh product declined (-10%) to 14,100 tonnes.

In January, the UK reported exports of fresh/frozen beef increased by 11% on-the year, to 9,500 tonnes. Exports to Ireland increased by 31% on year earlier levels, to 3,200 tonnes. The Netherlands is the UK’s second largest market, and the UK shipping 2,700 tonnes there in January, up 16% year-on-year. Although they won’t account for the whole amount, a 74% increase year-on-year in the volume of carcasses/half carcasses’ going to the Netherlands points towards the ongoing strength in the cow market. Over three quarters of UK beef exports are of fresh product and totaled 7,600 tonnes in January, a 22% increase on-the-year.

Highest deadweight hogget price ever

During the week ending 28 March, the GB live weight OSL SQQ which has been rallying since the start of the year paused, with a week-on-week decline of 2.09p, standing at 232.39p/kg. The quote currently stands almost 45p above year earlier levels.

Auction market throughputs rose by 8% (10,600 head) week-on-week, to 136,100 head. Throughputs of cull ewes increased by 21% (6,700 head), to 39,400 head.

However, in the week ended 24 March, the GB deadweight OSL SQQ gained 18p week-on-week, to 529.2p/kg, which is 130.1p above year earlier levels. This is the highest this measure has ever stood, and only fractionally below the highest recorded level for the deadweight NSL SQQ which was recorded in May 2013. Estimated slaughtering’s for the week totaled 254,800 head, a 15% rise on the same week last year. As well as the high price, part of the year-on-year increase in throughputs is likely to be due to Easter falling earlier this year than last.

AHDB estimates that the hold-over of lambs from 2017 into 2018 is higher year-on-year; in the year-todate AHDB estimates that 10% (254,700 head) more lambs have been killed compared to year earlier levels. Industry reports suggest that due to recent poor weather conditions there is currently a lack of new season lambs available for slaughter.


Snow slows deadweight lamb price gains
In the week ended 7 March, the GB live weightSQQ increased by 15.05p on-the-week and up 52.97p on year earlier levels, standing at 226.58p/kg. Daily live weight prices increased sharply at the start of the week recording an average of 226.41p/kg on Thursday 1 March, a 10.6p gain on the previous day. There was no recorded OSL daily price for the Friday. Prices peaked for the week on Monday 5 march at 233.03p/kg, a 22.7p increase on the same day
of the previous week. Since then live weight prices eased significantly to finish at 221.04p/kg on Wednesday 7 March, although this was still 5.2p up on week earlier levels.
Global prices have also continued to be strong which is supporting domestic farm gate prices by reducing imports from New Zealand, according to reports.

Due to the poor weather conditions auction market throughputs took a downwards turn with week totalling 108,302 head, 3% (2,900 head) down on the previous week. Cull ewe throughputs also eased (-25%) onthe-week, to 21,451 head. It is expected that auction market throughputs are likely to recover next week, as normal trading resumes.

During the week ending 3 March, the GB deadweight SQQ rose by 7.6p week-on-week to 493.9p/kg. This was a more modest week-on-week increase than recorded in the previous four weeks and the opposite of one might have expected with the terrible weather. This might in part be due to some processors having a lower killing capacity with staff struggling to get to the abattoir. Currently the measure stands almost 110p above year earlier levels. Estimated slaughtering for the week took a tumble as many parts of the country were covered in snow. Compared to last week estimated slaughtering were down by 27% (60,500 head), to 166,300 head. The key Easter kill period is now starting and an increase in numbers coming forwards is expected over the coming weeks.

New Zealand gaining competitive edge over British lamb

Lamb prices in New Zealand have continued to trend at a higher level year-on-year through March. In the week ending 24 March, the New Zealand North Island lamb price was recorded at 710 NZ cents per kg. Currently the price is just under 180 cents above year earlier levels and almost 215 cents above the five year average for this time of year. Despite this, the rally in the GB price means the gap between GB and New Zealand lamb prices is growing, which makes New Zealand lamb more competitive on the British market again.

As expected, following reports from Beef and Lamb NZ that New Zealand had fewer lambs left available for slaughter compared to year earlier, New Zealand production of sheep meat in February declined 20% (12,700 tonnes) month-onmonth, to 51,900 tonnes, according to the Ministry of Primary Industries. Compared to production in February 2017, production declined by 15% (9,100 tonnes). Despite this, total production during the current New Zealand production year (started in October 2017) is still 5% (11,200 tonnes) up on year earlier levels, at 248,800 tonnes. Sheep meat production from lambs in particular took a sharp hit in February, down 19% (10,800 tonnes) year-on-year, to 37,600 tonnes.New Zealand exports during February rose by 3% (1,600 tonnes) year-on-year, to 52,200 tonnes, according to the latest data from Statistics New Zealand. New Zealand exports to China were higher year-on-year (26%), to 23,000 tonnes.

In contrast, New Zealand exports to the EU declined sharply (-19%) year-on-year, to 14,900 tonnes. When looking at New Zealand exports to the UK, during February they stood at 6,300 tonnes, a 26% (2,200 tonnes) year-on-year decrease.

With the competitive edge which New Zealand typically has over British lamb growing and moving back towards more historic levels, how prices develop over the coming months both domestically and on the global market will have an impact on future UK imports from New Zealand. As much as New Zealand is increasingly competitive on the UK market, if the profit margins look more promising elsewhere, or there are simply fewer lambs left to export, New Zealand lamb imports are likely to remain at a reduced level at least in the near future.

Sheep meat consumption in China forecast to rise

In China around 3% of all dietary protein is from sheep meat however consumption of sheep meat in China is increasing with the growing middle class driving this growth. Pork is the most popular meat protein in China, followed by poultry, beef and then sheep meat. Traditionally sheep meat was more likely to be consumed in the northern regions of China, especially during the colder months due to a belief that it generated internal heat. However, consumption has been rising in the warmer coastal regions as wealthier consumers look to diversify their diets and are also more likely to be able to afford imported sheep meat. It is estimated that around 65% of all sheep meat in China is consumed outside of the home, according to USMEF. Looking forwards, Chinese consumption is forecast to increase by around 14% (0.5kg), between 2017 and 2027, to 4kg per capita per year according to GIRA.

Demand in China for imports can be volatile and heavily affected by domestic production. Industry reports have suggested that Chinese domestic production has been lower in 2017 than in 2016. This is further confirmed by the latest data from China Customs, Chinese imports recorded a 13% (29,000 tonnes) year-on-year rise, to 249,000 tonnes. Most of China’s imports of sheep meat come from New Zealand and Australia. China however, is the world’s largest producer of sheep meat, with an estimated flock of 312 million head in 2017.

Australian lamb prices still high

The Australia eastern states trade lamb price declined sharply in mid- February, and stand at 597 AUS cents per kg in the week ended 8 March, according to the latest data from Meat and Livestock Australia (MLA). The price in Australia is currently 14 cents below year earlier levels but 70.8 cents above the 5 year average for this week. Australian prices rallied sharply at the start of 2017 and maintained the level throughout the year, not the typical seasonal pattern. The gap between GB and Australian prices has widened significantly since the start of the year, due to the GB price moving upwards. Typically, Australian lamb is cheaper than British lamb, however this time last year British lamb was cheaper in sterling terms. Currently the difference stands at around 142p/kg, which is slightly below historic levels.

Total sheep meat production in Australia stood at 697,700 tonnes cwt in 2017, 2% (11,800 tonnes) higher than in 2016, but still below levels in 2014 and 2015. The composition of the sheep meat did change however. Production from lambs fell by 1% (6,700 tonnes), to 509,200 tonnes, whereas production from culls increased by 11% (18,600 tonnes), to 188,434 tonnes. According to industry reports, Australian sheep farmers have begun to feel more confident in the market and weather conditions and therefore have kept ewe lambs as replacements but also cleared out some older ewes from their breeding flocks.

Pig Prices (EU Spec)

EU pig prices fell significantly throughout January. The EU reference price declined continually up the week ending 4 February, however since then prices have taken a sharp upward turn. Over the past three weeks, prices have risen by €7.25 to €140.95/100kg for the week ended 18 February. Prices were not increasing at the same rate during the equivalent period last year, so the gap between this year’s and last year’s prices has narrowed over the period. For the most recent week prices are €11 below this time last year. The sudden upward momentum reflects a downturn in German slaughtering’s in particular, but with growth in the number of young pigs and piglets in their November census, whether this will continue is somewhat uncertain.

Looking at member states individually, most have recorded significant price rises in recent weeks. The German reference price stood at €147.65/100kg in the week ending 18 February, which is €13.31 above three weeks earlier. Other major producers also recorded significant price rises over the period, including Poland and the Netherlands. However, Danish reference prices have continued to fall, declining by €2.07 over the past three weeks to €121.92/100kg.

Pig Prices (UK Spec)
UK PRICES

Finished pig prices continued the downward trend apparent since mid-2017 in January. During the month, the EU-spec SPP averaged 147.88p/kg, 2.88p down on the previous month and making this the sixth consecutive month of decline. The SPP for January last year was 2.78p/kg higher, meaning the gap relative to year earlier levels had widened since December. Higher throughputs during the month, as any festive backlog cleared, likely contributed to the falling prices and equally demand has reportedly been lackluster. Moving into February, the SPP has continued to follow a downward trend, standing at 145.66p/kg for week ended 24 February.

The EU-spec APP in January followed a similar trend, falling 3.21p/kg on the month to average 150.96p/kg. Again, this will have been partly influenced by high post-Christmas throughputs, as well as the downward pressure on price evident to producers throughout the EU. The price differential between the APP and the SPP narrowed in January to 3.08p/kg, with the premium market seemingly coming under greater pressure than the standard market.

Poultry market update

Thursday, March 29th, 2018 Poultry meat production in the UK increased by 1% (13,600 tonnes) year-on-year in 2017, to 1.8 million tonnes, according to Defra data.

Production from boiler chickens accounts for around 85% of all poultry meat produced in the UK, totaling 1.6 million tonnes in 2017, up 2% (35,800 tonnes) year-onyear. The total number of broiler chickens slaughtered rose by 4% (44.3 million birds) during the same period, to 1.03 million birds. The number of boiling fowl (which includes spent hens and spent breeders) declined by 6% (3,590 birds) year-on-year, to 53,300 birds.

The number of broiler chick placings has been increasing over the past three years and in 2017 increased by 3% (34.6 million chicks) on-the-year, to 1,047.2 million chicks. In every month apart from December the number of chick placings increased on the year. In January and February 2018, broiler chick placings also recorded strong year-on-year increases.

Production of turkey meat declined by 11% (18,000 tonnes) on-the-year, to 146,600 tonnes, while the number of turkeys slaughtered declined by 8% (1 million birds), to 13.1 million birds. The average live weight of a turkey at slaughter fell below 13kg for the first time since 2012, at 12.7kg/head. Duck production increased by 4% (1,000 tonnes) on-the-year, to 30,600 tonnes.

In 2017, the UK imported 7% (31,100 tonnes) less fresh/frozen chicken meat than in 2016, at 410,000 tonnes, according to data from HMRC. UK exports of chicken grew by 18% (47,100 tonnes) in 2017 onthe-year, to 309,900 tonnes. Over 95% of UK imports of fresh/frozen chicken meat imports come from other EU countries, while just over three quarters of exports are destined for the EU. As with the pig sector, trade plays an important role in balancing the carcass.

So far in 2018, chicken has performed strongly in the supermarkets, somewhat bucking the trend of other proteins. In the 12 weeks ending 25 February, there were 18% more promotions on chicken which has helped support an increase in volume sold.

Exchange Rate The Pound remains “extremely cheap” and with a Brexit transition deal now in the bag, fading economic uncertainty should create scope for the British currency to regain its poise against the Euro and US Dollar, according to strategists at ING Group.

This call comes hours after British and European negotiators agreed a deal to extend the status quo for 21 months after the March 2019 Brexit date. The agreement was reached after issues covering citizens’ rights and a financial settlement were agreed in full while the Northern Irish border question remains open, but enough assurances on the issue have been provided to allow negotiators to recommend talk’s progress to the third stage.

Most importantly for businesses, the deal removes or at least defers the risk of a so-called cliff edge Brexit, where the UK leaves the EU immediately after an agreement reached in the dying hours of March 2019 or leaves without an agreement an agreement at all and defaults to trading with the EU under World Trade Organisation terms.

The Pound rose sharply against the Dollar, Euro and all of its other developed world rivals in response to the deal agreed Monday.

This saw Sterling break back above the 1.40 level against the Dollar while traversing its way toward the higher end of its five-month trading range against the Euro, with the Pound-to-Euro rate having been quoted as high as 1.1434.

Download the April Report 2018 as a PDF file