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Beef Overview

All roasting joints and stewing meat (diced beef etc.) have increased in value due to the seasonal demand. Prime meat is in high Beefdemand with the lower numbers coming through the markets over the last couple of month. There are indications that the price of cattle will rise due to the price rise of feed. This has been mainly driven due to the extended period of hot weather this summer which has caused a lack of natural feed meaning farmers have had to use up any feed put aside for winter.

Cow prices are dropping but there is a high number of poor quality carcasses coming to market due to the heat through summer when there was lack of natural feed causing a poor consistency on quality.

Imported steak meat is still a more viable option from a consistency, availability and price point of view, and the quality is equally as good as the UK.

Fewer prime cattle slaughtered in September

During September, according to the latest data from Defra, total beef and veal production was down slightly, by 1.1% (-800 tonnes) compared to the previous year, to a total of 73,500 tonnes. Despite this, production in the year to September is still 11,200 tonnes (+1.7%) more than in the previous year, a total of 678,600 tonnes.

The decrease in production during September has been driven by lower prime cattle slaughtering.

Prime cattle slaughter for September is down by 4,200 head (-2.6%) compared to 2017. This is a result of 5,300 head fewer (-6.1%) steer slaughterings during the period. The declines have been offset somewhat by an increase in heifer slaughterings for the month, up 1,500 head (+2.5%) on the year. Increased heifer slaughterings have been a trend for much of the year and cumulatively there have been almost 20,000 more heifers slaughtered in 2018 when compared to last year. This is somewhat surprising considering the elevated level of cull cow slaughterings, but could be indicative of producers exiting the sector, or at least downsizing, possibly even as a risk management strategy in response to uncertainty surrounding Brexit.

As mentioned, cow slaughtering are particularly high this year, and remained higher in September. During the month, cow slaughterings totalled 56,800 head, 4% higher than in September 2017. The 12 month rolling total cattle slaughter is now over 675,000 head, the highest rolling total since the over thirty month scheme was abolished in November 2005

Cow prices continue to decline

During the week ending 20 October the GB all prime average slipped by almost 2p, to 364.28p/kg. Despite this decline, the measure continues to trend above the five year average and is around 4p higher than the same week last year. Prime cattle prices do typically face some seasonal pressure at this time of year as farmers begin to prepare for housing cattle for winter. Estimated prime cattle slaughtering for the week totaled 34,300 head, a similar number to in the previous week, and 5% (1,600 head) up year-on-year.

During the week the heifer and steer overall prices both recorded declines of 2p and 2.4p respectively. In contrast, the R4L specification prices recorded declined nearer to around half a penny. Industry reports suggest some processors are increasing the deductions for cattle which are outside of their preferred carcass specification.

For the third consecutive week, the overall cow price recorded a significant decline (-3.8p) and now stands at 219.8p/kg. For cows meeting the –O4L specification, prices recorded a similar trend slipping to 247.9p/kg. These declines have come about despite reported increases in export orders. Estimated slaughterings for the week totalled 13,400 head, an 11% (1,400 head) increase on year earlier levels.

Lamb Overview 

UK Lamb prices overall continue to decrease. Retail plants and exporting is the preferred destination from produce

rs. The middles of lamb (racks and cannons) are still being exported for a premium throughout Europe and Asia. Overall the Lamb price has remained firmer than previous years and will continue to do so due to the premium prices producers can get by exporting various cuts.

NZ Lamb figures predict similar numbers available over the next year for exporting. Prices look like they will be high similar to last year due to better currency exchange rates and more profitable markets (China etc.)

New Zealand beef and lamb

The new season outlook for New Zealand beef and lamb production forecasts no change in lamb exports in the 2018/19 season, remaining above $3 billion for the second season, while beef exports are set to decline.

Sluggish lamb demand keeps prices down despite reduced throughputs

During the week ending 24 October, the GB NSL live weight SQQ dropped by over 3p week-on-week, to average 164.26p/kg. The price rose marginally at this time last year and so the price is currently 2.75p below the same week in 2017. The price at the moment is quite typical for the time of year with the last three years all being within 7p of the five year average. Industry reports lately have alluded to lambs going through the finished ring that would perhaps be better suited as stores, which could mean that the price received by some producers varies away from the national average by more than usual.

Auction market throughputs are down 7% on the week to 96,000 head. Meanwhile, throughputs for deadweight marketing have also fallen away, down 5% (-12,700 head) week-on-week to total 265,500 head. Both avenues to market are considerably down in numbers compared to the previous year, which is a reflection of lackluster demand for lamb at the moment.

In the week ended 20 October, the GB NSL SQQ deadweight quote declined by half a penny to average the week at 388.9p/kg. This is above both the 5 year average (+17.8p) and last year’s price (+2.5p).

Under finished lambs potentially weighing on market

For the past few weeks throughputs have been gently rising. Lambs have been slower to finish this year, and now some farmers are thinking about reducing numbers as winter approaches. The current mixed weather may also be making some nervous that “true” winter will shortly set in. Industry reports have suggested some of the lambs coming forwards are still too lean and are unfinished, making them difficult to place.

Pork Overview

Prices are softening, yet the market is unstable due the swine fever in Europe and throughout China. This could seriously impact availability and the price going forward. UK Pork prices have dropped but indications are that they will rise due to an 8% price rise in piglets due to reduced fertility in pigs brought on by the heat experience this year and pressure from the export market. The export market is still the preferred destination due to the value of the pound and more profitable markets.

Pig Prices (EU Spec)

During the week ending 20 October, the EU-spec SPP fell for the 14th consecutive week, declining 0.93p. This is the biggest weekly fall during the 14 week period and the price now averages 145.37p/kg, 11.70p below the same week last year.

GB estimated slaughterings for the week totalled 173,300 head, 10,600 head down on the previous week and around 1.5% (-2,700 head) below the same week last year. Industry reports suggest that some factories are having trouble with reliability and that throughput capacity is up and down as a result. This could explain some of the fluctuation in estimated slaughterings recorded recently. The average carcass weight for the SPP sample was 84.32kg. This is an increase of 680g compared to the previous week but 410g lighter than the same week last year.

The EU-spec APP also declined slightly in the week ending 13 October, down 0.62p to finish the week on 149.39p/kg. This is 11.63p below year earlier levels. The gap between the APP and the SPP in the corresponding week measures 3.09p, which is slightly narrower than the previous week and actually the smallest difference since August.

Pig Prices (UK Spec)

During the week ending 20 October, the UK-spec SPP fell for the 15th consecutive week, declining 0.91p. PigsInFieldThis is the biggest weekly fall during the 15 week period and the price now averages 142.77p/kg, 11.49p below the same week last year.

GB estimated slaughterings for the week totaled 173,300 head, 10,600 head down on the previous week and around 1.5% (-2,700 head) below the same week last year. Industry reports suggest that some factories are having trouble with reliability and that throughput capacity is up and down as a result. This could explain some of the fluctuation in estimated slaughtering’s recorded recently. The average carcass weight for the SPP sample was 85.85kg, 690g up on the previous week.

The UK-spec APP also declined slightly in the week ending 13 October, down 0.62p to finish the week on 146.72p/kg. This is 11.43p below year earlier levels. The gap between the APP and the SPP in the corresponding week measures 3.04p, which is slightly narrower than the previous week and actually the smallest difference since August.

African swine flu is causing alarm in China—and beyond

As China’s agriculture authorities scramble to contain the spread of a pig-killing virus, experts worry that it could spread elsewhere in Asia. But the consequences of the disease at home are bad enough. Pork is China’s favourite meat. Pig farming is big business. The collapse of its market would hamper economic growth. Badly handled, the outbreak could dent the government’s credibility.

The disease was first reported on 3 August, when it was noted that 47 out of 383 pigs on a small farm in Liaoning, a province in the far north-east, had died. The virus has spread to five other provinces: Anhui, Henan, Heilongjiang, Jiangsu and Zhejiang. The authorities have stepped up inspections, shut some live markets, stopped the transport of pigs from the affected areas and culled nearly 40,000 swine. On 5 September the UN’s Food and Agriculture Organisation (FAO) held an emergency meeting of regional animal-health experts in Bangkok. The rapid onset of the disease in China and its spread to places 1,000 km apart mean it could easily jump across China’s borders, says the FAO.

This time the pig fever is stoking fears of inflation. The cost of pork has an inordinate effect on the consumer-price index. With a fifth of the world’s population, China consumes half its pork. The government has set up a strategic pork reserve to keep the price stable. The blue-ear pig-disease episode of 2007 provoked a rise of 87% in pork prices and one of the biggest leaps in inflation for nearly two decades.

The disease is transmitted by ticks and direct contact between animals, and can also travel via contaminated food, animal feed and people moving from one place to another, there is no vaccine for this, but it is not harmful to humans.

African swine fever reaches Western Europe in blow to EU pork exports

Two cases of African swine fever have been identified in wild boars in Belgium – sparking fears of a ban on exports to non-EU countries which would come as a crippling blow to the pork industry.

The news has also prompting neighbouring France to call for measures to prevent the disease spreading further, Germany – the EU’s largest exporter of pork has sent experts to eastern Europe to advise on how best to stop its spread.

Denmark – another country closely associated with the pork industry – has even announced plans for a fence along its border with Germany to keep the virus out.

The disease has been present in Eastern Europe for several years – but this is the first time it has been identified in the west of the continent, in this instance in Wallonia near the French border.

There is no vaccination or cure, and when it was discovered at Europe’s second-largest farm in Romania at the end of last month, authorities culled about 140,000 pigs

Poultry overview

Chicken prices have remained stable. The EU Brazilian Poultry ban is still in place. UK produce prices have stabilised as the summer comes to an end and as seasonal demand softens European Chicken is more readily available easing the pressure on the UK market.

However we would expect to see an increase in demand during November/December which will strengthen the price.

We have found that Chicken is becoming more popular during November/December, especially with the Christmas trade. It is more commonly being used at Christmas parties and it is proving to be an easier more cost efficient option than turkey.

Feed market update – October 2018

AHDB usage data revealed that the amount of cereals used to produce GB animal feed in August 2018 increased to an all-time high for the month, reflecting the record amount of compound and integrated poultry unit (IPU) feed produced in August 2018. Ruminant demand for compound feed is also up 15% on the year, likely reflecting forage production issues this season

Turkey overview

All indications are that turkey availability this year is going to be tighter than previous years. Prices will be affected. UK turkey is going to be very short, indications are that birds are going to be on the small side due to all processors changing to chicken during summer to capitalise on the Brazilian poultry ban. Indications are that that demand on UK turkey will outstrip availability with retail getting first option, therefore we would advise that the fresh EU product would be the best option to guarantee consistency and supply.

Looking at the market it is going to be really tight on availability. Our main focus will be to get the volume of product required for our customers, and we will have no option but to pay the highly inflated prices.

Turkey 2018

Customers are urged to pre order as much as possible to ensure availability and continuity of supply. We need to make you aware of possible price rises. Turkey prices are expected to be volatile this year, reflecting the wider poultry market. Problems in Brazil, expected increases in feed costs and trade arrangements, and high demand in Europe will all have an impact on poultry prices in the run-up to the festive period. UK turkey is going to be really short. The UK Turkey market currently has the lowest number of Turkey producers we have ever known. There is a real lack of suppliers this year due to previous years not being able to compete with European suppliers on consistency and price.

Any Customer thinking of using UK Turkey we would highly recommend that you reconsider and switch to Fresh EU product to ensure continuity of supply.

Currently the supply has been consistent with demand with EU suppliers producing “just enough” for the demand within the EU and UK but as seasonal demand has increased, availability is getting tight causing the price to increase.

The reasons for this are as follows:

From the 4 major turkey producers in Brazil – 3 of them are now banned to supply to the EU following fraudulent salmonella tests and quality investigations.

Major users in the EU that would normally purchase 1,000’s of tons of frozen Brazil meat switched to EU supply.

This caused a surge in demand and fresh supply being contracted up for the early part of 2018 - the knock on effect of this is that less turkey was put into the freezer for the latter part of 2018 when demand is higher.

There were a few contract opportunities available in August and September but many customers/suppliers chose to sit on the fence rather than commit to supply.

The uncertainty of Brexit, higher prices and historical market trends meant that consumers believed the market price would reduce into September and decisions could be made then. This has not been the case and in fact prices rose during September.

product to EU destinations. July is no different, with volume to the UK up 252% (+381 tonnes) on the year, to total 532 tonnes.

Imports in the year to July are up by 5% to total 160,000 tonnes. Irish imports in the year to date are up by 6% to total 112,300 tonnes. Brazilian imports in the year to date are up 130% to total 2,000 tonnes. However, it is worth noting that despite the year-on-year increase, imports from Brazil in the year to July are still below 2016 levels

First Irish Beef Container Reached China

This will have an impact on UK importing beef from Ireland. Ireland currently makes up 67% of UK Beef Imports. China is a more valuable market for the Irish exporters and will be their preferred destination, meaning we may potentially have to compete to get produce which would certainly have price implications. China is the largest beef importer globally with imports predicted to increase to 2 million tonnes per year by 2020 with long term demand predicted to steadily rise. Beef imports alone are predicted to increase 11% in 2018. It is expected that Chinese domestic production in the future should grow due to increased dairy production, but this will do little to offset the long-term forecast growth in demand. China remains the main focus of attention for nearly every exporting country and has become one of the few stable markets.

Lamb Overview

Lamb prices overall have decreased. Retail plants and exporting is the preferred destination from producers. The middles of lamb (racks and cannons) are still being exported for a premium throughout Europe and Asia. However overall the Lamb price has remained firmer than previous years and will continue to do so due to the premium prices producers can get by exporting

New Zealand beef and lamb outlook published

The new season outlook for New Zealand beef and lamb production forecasts no change in lamb exports in the 2018/19 season, remaining above $3 billion for the second season, while beef exports are set to decline.

Sheep numbers at 30 June amounted to 27.3 million head; down just under 1% year-on-year. Figures were a result of fewer breeding ewes in all regions driven by strong prices for cull ewes, but moderated by a lift in hogget numbers.

Beef cattle numbers at 30 June totalled 3.68 million head; a near 2% increase on year earlier levels, predominantly driven by an increase in weaner cattle held back in response to high prices of replacement stock. Meanwhile, dairy cattle numbers lifted slightly on the year to 6.6 million head.

The estimated volume of lamb meat exports in 2018/19 is projected to decrease by almost 2% due to decreased availability of lambs for export, however, this will be partly offset by a slight (0.5%) rise in average carcass weight. Total mutton exports are expected to see a large (15%) decline to $466 million, due to a large decline in volume. This fall is despite the projected 3.2% increased on the record 2017/2018 price of 417 cents per kg.

Beef and veal exports are expected to decline by over 3% to 415,000 tonnes, due to a predicted decline in the number of cattle processed for export to 2.51 million head. The value of shipments are also expected to decrease almost 3%, despite the more favourable exchange rate.

Mixed Bag for Sheep prices this week

Store lamb prices at auction markets in England and Wales typically record gentle downwards movement at this time of year.

This year has been no exception, although prices did receive a small amount of support this week. During the week ending 22 September, the price averaged at £54.40/head, up £0.41 week-on-week.

GB finished live weight trade remained stable during the week ending 26 September, with the NSL SQQ at 170.97p/kg, just 0.37p up week-on-week. Currently the quote stands 8.35p above year earlier levels, and up almost 11p on the five year average.

Auction market throughputs for the week picked up somewhat (+11% week-on-week) but remained below typical levels for this time of year, at 98,800 head.

Pork Overview

EU prices softened but the market is unstable and prices are expected to rise due to the feed costs and the swine fever throughout Europe. UK Pork prices will rise due to an 8% price rise in piglets due to reduced fertility in pigs due to the heat experience this year and pressure from the export market. The export market is still the preferred destination due to the value of the pound and more profitable markets.

Pig Prices (EU Spec)

During the week ended 22 September pig prices continued to track down as they have been in recent weeks. The EU spec SPP fell by 0.09p, to 147.68p/kg. The price is currently 13.36p below las t year’s price.

GB estimated slaughtering’s were up around 600 head on the previous week to total 172,600 head. Industry reports suggest that supply is slightly ahead of demand, which remains subdued. The average carcass weight for the SPP sample for the week remained steady at 82.89kg.

In contrast to the SPP, the EU-spec APP rose slightly on the week, up 0.16p in the week ended 15 September, to finish on 151.74p/kg. The current figure is 13.99p lower than year earlier levels. The current price rise has widened the gap to the SPP, now measuring a 3.97p difference between the two prices

Belgian authorities have confirmed African Swine Fever (ASF) in its pig population.

The Federal Agency for the Safety of the Food Chain (FASFC) confirmed that the outbreak took place in Etalle, 10 miles from the French border. According to an OIE report, four wild boar were found to be carrying the disease. Three of the animals were already dead when found, while the fourth was destroyed.

The FSASC said: “Samples were taken directly and sent to Sciensano [the national laboratory] who confirmed that wild boars carry the virus responsible for ASF. Wildlife control and prevention measures within pig farms are now being implemented at the regional and federal levels, respectively, in a high-performance collaborative framework. Biosecurity in pig farms is essential and the FASFC ensures that it is permanently properly insured.”

The source of the outbreak is not yet known but control measures including zoning, added surveillance and official disposal of the animals, by-products and waste have been applied.

The agency added: “The situation is taken very seriously by the various authorities and levels of power in Belgium and the measures are carefully put in place and monitored, given the potential impact for the livestock and hunting sectors. A national task force was set up in early 2018 in this context. The different levels of power will continue to work closely together to maximize the effectiveness of prevention and control measures.”

Pig Prices (EU Spec)

Heatwaves Lead to 8% rise in Piglet Prices. With dry spells lasting more than 80 days in some parts of the country this summer, the heat has reduced the fertility of pigs and red meat prices are set to rise in the long run.

Conditions of weather is something that farmers are well accustomed to, however the extreme weather seen this year has put particular stress on farming costs and yields. Also affected is the price of feed which is set to rise as due to the extreme weather there has been a weak harvest (Meat Management September 2018)

Pig Prices (UK Spec)

During the week ended 22 September pig prices continued to track down as they have been in recent weeks. The UK spec SPP fell by 0.08p, to 145.04p/kg. The price is currently 13.12p below last year’s price.

GB estimated slaughtering’s were up around 600 head on the previous week to total 172,600 head. Industry reports suggest that supply is slightly ahead of demand, which remains subdued. The average carcass weight was 84.39kg.

In contrast to the SPP, the UK-spec APP rose slightly on the week, up 0.16p in the week ended 15 September, to finish on 149.04p/kg. The current figure is 13.72p lower than year earlier levels. The current price rise has widened the gap to the SPP, now measuring a 3.92p difference between the two prices.

Poultry overview

Chicken prices have now stabilised The EU Brazilian Poultry ban is still in place. UK produce prices have stabilised as the summer comes to an end.

Turkey 2018

The supply has been consistent with demand with EU suppliers producing “just enough” for the demand within the EU and UK but as seasonal demand has increased, availability is getting tight, causing the price to increase.

This month the price has already increased by 20%.

The reasons for this are as follows:

Of the 4 major turkey producers in Brazil, 3 of them are now banned to supply to the EU following fraudulent salmonella tests and quality investigations.

Major users in the EU that would purchase 1,000’s of tons of frozen Brazil meat switched to EU supply.

This caused a surge in demand and fresh supply being contracted up for the early part of 2018. The knock on effect of this is that less turkey was put into the freezer for the latter part of 2018 when demand is higher.

There were a few contract opportunities available in August and September but many customers/suppliers chose to sit on the fence rather than commit to supply.

The uncertainty of Brexit, higher prices and historical market trends meant that consumers believed the market price would reduce into September and decisions could be made then. This has not been the case.

The increase in business enquiries in September has pushed up the price with just enough turkey in the market to fulfil normal demand but no extra for any increased supply. Turkey is becoming increasing short in the market place.

We anticipate prices increasing throughout September/October, stabilising through November with another increase in December.

Download the November Report 2018 as a PDF file

  

UK Beef

Cattle trade levels
Cattle trade stabilises amid reports suggesting that the market for both commercial and cattle fitting specific supermarket schemes was finely balanced. Despite numbers seemingly increasing on the week, the all prime deadweight average levelled at 349.4p/kg.  This broad stability continues to reflect a more positive trading environment in which the all prime average has strengthened by more than 20p/kg since the start of August. With throughputs over the period up around 15,000 head, this price rise has evidently come as demand has improved. This means the supply and demand balance has consistently been in producers’ favour, with processors looking to secure adequate supplies of cattle. The situation could be maintained as the peak seasonal buying period approaches.
 
UK Beef & Veal
 
Beef and veal exports perform well again
Beef and veal exports increased 7% on the year to 8,500 tonnes. While higher shipments to the Netherlands and Ireland largely drove this increase, there was a spectacular increase in exports to Hong Kong. Despite this uplift in volume, the value returned to the industry was still lower compared with July last year, down 3% at £29.8 million; the unit price was back 9% on the year at £3,500/tonne.
 
Global Snapshot
·         Uruguay; Average export prices increases top 2011
·         Brazil; September see’s beef exports fall
·         Argentina; See’s lower prices for finished cattle
·         Paraguay; Beef exports up 15% year to date
·         Russia’s; Now threatens to stop imports via Belarus due to EU re-route of exports
·         Europe; Markets remain stable despite Russian embargo
·         China; Displaces Russia as key market for Uruguayan beef
·         Oceania; NZ Lamb production hits seasonal low
 
UK Lamb
 
Prices continue to ease
Lamb prices have continued to ease throughout September, largely as part of the expected seasonal trend for this time of year. This comes as supplies are plentiful and demand remains subdued. This was reflected in the GB NSL SQQ, which fell by 15p since the end of August to 149.7p/kg in week ended 27th September. The largest drop was seen in the first week of the month, week ending 5 September, when the SQQ fell 10p on the week to 154.5p/kg. Following this drop, the week on week declines were less severe with some stabilisation apparent at times.
On the back of more favourable weather conditions, lamb carcases were 2% higher in September, compared with the same month in 2013 at 19.2kg. Adult carcases were also heavier, albeit only by 1%, at 25.8kg. Overall sheep meat production was up 1% on the year at 25,400 tonnes, as the reduced adult sheep kill offset the higher carcase weights and more lambs were being slaughtered. Production in the year to date is now up 3%, or 6,000 tonnes, on the year. 
 
Imported Lamb
 
UK imports see little change
Imports were almost unchanged on the year. At 7,500 tonnes, total import volumes were largely static, being up only 0.3% compared with 2013. However, volumes were very low in 2012 and shipments remain well below historic levels. Bucking the trend that has been evident so far this year, New Zealand shipments were 7% higher year on year. Australia continued to send more product, with shipments 1% higher on the year, meaning that in the year to date, Australia has shipped 34% more product than they did in same period last year. These higher shipments were offset by lower volumes from Ireland, the Netherlands and the Falkland islands. Despite UK imports from New Zealand being higher on the year (although volumes were unchanged overall) this looks like a blip and the volume of New Zealand product on the UK market should still be lower on the year. August shipments from New Zealand to the UK were reportedly down 5% on the year. Given the shipping times from New Zealand, these lower volumes should have started to enter the UK market from early September onwards. As such, current volumes of New Zealand product should be at a low ebb, both seasonally and compared with recent years. Additionally, the average value of these exports is considerably higher than they were a year ago, being 14% more expensive.
 
Price forecasts from Brussels indicate a 3% recovery in the EU heavy lamb price for 2014 as a whole after the small fall in 2013. In January-August this year the price was 4% higher, even though in August it was down 3%, given the lower prices in the UK and Ireland. One factor that is affecting lamb prices this year is the low value of sheep skins on the global market, in response to reduced demand from key importers such as China. In early September, lamb skin prices in Australia were down two thirds compared with a year earlier.
 
Pork
 
UK pig prices
The EU-spec GB SPP fell to 152.35p per kg for the week ended 18 October, down by almost 2p for the second week in a row. Please note that one plant is missing from the SPP sample this week. The normal seasonal increase in finished pig prices is clearly not yet evident and actually, based on comparisons with the DAPP, this is the lowest price since September 2012. Prices remain somewhat volatile as contracts are renegotiated following the end of the DAPP and the true market situation may not be completely clear for another couple of weeks. AHDB/BPEX estimated slaughterings showed a 3% reduction in the week ended 18 October, to 162,100 head. Carcase weights in the latest week edged up to 82.22kg, a marginal increase on the week but the largest weekly average on record. This is reported to be partly a result of more pigs than normal being rolled in recent weeks as supply is outstripping demand.

EU pig prices

The EU-spec GB SPP resumed its downward trend, falling to 153.98p per kg for the week ended 11 October. This was almost 2p below the level a week earlier, with post-DAPP contract changes still adding volatility to the price. Pig growth over the last few months has been positive, meaning heavier pigs at slaughter, and supplies of pigs are generally rising in at the same time, although the slaughter estimate for the latest week was below last year’s level. This increased supply has contributed to finished pig prices remaining sluggish. The record gap between UK and EU prices also continues to have a part to play. The average carcase weight for the week ended 11 October was almost unchanged from the previous week, at 82.04kg. The probe measurement reached 11.5mm, the highest since the start of the year. For the week ended 4 October, the GB APP rose marginally, by 0.30, to 158.44p per kg. During the same week, the SPP also increased slightly, to 155.62p per kg, maintaining a difference of almost 3p between the two price series.
 
Poultry
Did you know – the humble chicken

World Wide
·         50 billion chickens are currently grown each year.
·         Americans now eat 150 times as many chickens as they did 80 years ago
·         When China & India catch with the this consumption level the world will need to double its current volumes to 100 billion  

At Home

       UK – 29 million laying hens
       UK – 116 million broiler chickens
       UK – 750 million chicken slaughtered annually
       UK – 14.42 million chickens per week
       UK – 2.06 million chickens per day
       Chicken represents 46% of all protein consumed by the average person in the UK

       More than 55% of all chicken is sold as Breast, 25% as whole birds & the remaining 20% as Drumsticks / thighs / legs / wings / offal cuts

Download the November/December Report 2014 as a PDF file

 
 

 UK Beef
 
Further gains in prime cattle trade
In week ended 20 September, the deadweight cattle trade moved in a positive direction again, despite reports suggesting that trade is starting to level and overall throughputs being unchanged on the previous week. With the market continuing to benefit from solid processor demand, the GB all prime deadweight average price increased by over 2p on the week to 346.5p/kg. As such, it is edging closer to the £3.50/kg threshold which represents a reasonable target for many producers in the current climate. Despite more steers coming forward compared with the week before, R4L’s strengthened almost 2p to reach 358.2p/kg, their highest position since early May.
 
UK Beef & Veal
The combination of more cattle coming forward and higher carcase weights has resulted in some very significant year-on-year increases in Irish beef and veal production in the first half of 2014. However, at 138,200 head cattle slaughterings in July were up just one per cent, or 1,900 head, compared with July last year. With carcase weights staying higher, beef and veal production still increased by four per cent to 45,700. However, this was the smallest year-on-year uplift in 2014 so far and well behind the double digit increases in the March to June period. With the UK by far the largest destination for Irish beef, reduced availability could in some part have contributed to the stability on the UK market during July.
 
Global Snapshot
·         Uruguay; YTD Slaughter numbers increase to 1.43m head +0.4%
·         Brazil; Finished cattle prices remain firm
·         Argentina; Has warning from EU to abstain on it’s over trade with Russia
·         Russia’s; Ban on EU & US food, sees no substantial change to market values
·         Europe; Markets stable despite Russian embargo
·         USA; July beef exports down 14.6%
·         China; Consumption set to rise a further 15% by 2023
·         Australia; Lamb exports edge higher for 8th consecutive month
 
UK Lamb
Prices stabilise after throughputs fall
Liveweight lamb prices continued to follow a ‘normal’ seasonal pattern and eased on the week. The average GB SQQ for the period was back 5p to average 152.3p/kg. Numbers at GB auction markets were tighter, being back over a quarter on the notably higher throughputs earlier in the month. It is possible that, with the arrival of the breeding sale season, producers’ focus may have switched to marketing breeding sheep. Despite the GB NSL SQQ being down on the week overall, prices did demonstrate stability in some areas. Whilst the majority of auction market daily averages showed a drop in prices. Despite the recent weakening of sterling against the euro it appears that it has not been enough to improve demand on the continent. As the autumn weather arrives and with the approaching festival of Eid el Adha offering some support to prices, it is possible that the downwards pressure of recent weeks could be alleviated to some extent. However, the extent of this will, in the main, depend on consumer demand.
 
Imported Lamb
NZ sheep numbers still falling
New Zealand lamb (and mutton) production is unlikely to materialise, as performance gains should be harder to come by. In the coming 12 months or so, supplies are unlikely to show any real growth as the number of hoggets was down 8% on the year, meaning short term slaughterings should be lower. New Zealand lamb production in the 2014/15 season is likely to see little changed, unless fewer lambs are retained for breeding. If this occurs then the production base will be eroded even further, meaning longer term production will be affected. With Australian production in 2014-2016 expected to show year-on-year declines, the world trade is still likely to experience relatively tightened supplies. This should, broadly speaking, add support to the world market, which should benefit the UK as a key part of the global trade, being the both the third largest importer and exporter.
 
Chinese sheep meat imports continue to surge
Latest import figures from China continue to show that there is little sign of demand for imported sheep meat slowing. Chinese sheep meat imports were up 86 per cent on the year at 31,200 tonnes. However, this increase was purely driven by increased volumes from New Zealand, with shipments increasing three-fold on the year to 21,700 tonnes. The other suppliers, Australia and Uruguay, showed year-on-year declines, falling one per cent and nine per cent respectively. In addition to showing further growth in total volumes, there continues to be signs that the Chinese market is evolving and developing a taste for higher value product. Chinese imports of carcases totalled 6,400 tonnes or nearly 21 per cent of total imports. This compares with only 600 tonnes in the corresponding period of 2013 which amounted to less than four per cent of total imports. In May 2012 there were no shipments of carcases at all.
 
Pork
UK PRICES
The EU-spec DAPP in July averaged 161.50p per kg, down for the second consecutive month and almost 3p lower than June. Having fallen steadily since late May, finished pig prices recorded the lowest monthly average since April last year. In addition to subdued demand in the UK market, price falls in the EU added further pressure to clean pig prices. At the same time, pig supplies were somewhat more plentiful. As such, finished pig prices were 7p per kg down on the same month in 2013. Prices continued to fall and by week ended 16 August, the EU-spec DAPP had dropped to 158.35p/kg. The GB SPP average for July stood at 161.48p per kg, 2p lower than the previous month. This was the lowest monthly average since the new price series began in April this year. During the same month, the GB APP fell by a similar amount to 163.67p per kg.
 
EU PRICES
According to figures published by the European Commission, EU finished pig prices in July averaged €169.51 per 100 kg. This was around €1 lower than the previous month. Slow demand in the European Union was the key driver of lower prices in recent weeks, although the Russian ban on imports of EU pork continued to weigh on the market. The current level was around €12 below pig prices in July 2013. In the most recent week, ended 17 August, EU finished pig prices stood at €165.20 per 100 kg. For the same week, the difference between the UK and EU pig prices fell slightly to €27 per 100 kg.
 
Poultry
Did you know?
Slowing of Asian Population Growth to Impact Chicken Consumption
As the rate of growth in Asia's human population slows down, average poultry meat consumption per person has increased to 9.4kg, according to the latest estimate. As birth rates decline, so population growth continues to slow. Over the decade to 2023, population growth is projected at around one per cent per year compared with 1.2 per cent in the previous decade. According to USDA long-term projections, while population growth rates in developing countries are expected to decline, they will remain above those pertaining to the rest of the world. Hence, the developing countries’ share of the global population will continue to rise and could account for 82 per cent of the total in 2023. Global poultry meat consumption expanded by 2.5 per cent per year between 2000 and 2011 from 11kg per person per year to 14.4kg on an eviscerated weight basis. The Israelis are the biggest poultry meat eaters in Asia with an average annual consumption of 69.7kg per person in 2011. In contrast, while uptake in India in 2011 averaged around 1.8kg per person, when this is multiplied by the human population of some 1.2 billion, the total quantity of poultry eaten is a massive 2.2 million tonnes. Currently uptake is considered to be in the region of 3kg per person, and the industry considers that this will triple to 9kg by 2030.

Although per-capita chicken consumption in China has remained steady at around 12kg per person between 2009 and 2011, expansion is anticipated as living standards rise. 

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UK Beef

All three categories of prime cattle showed declines throughout last month, with the young bull average down the most, being 7p down over the past three weeks to 325.2p/kg. Young bull values are now at their lowest point since September 2012. This comes as processors continued to apply significant penalties onto some of these cattle which are outside market specifications. Meanwhile, demand for steers and heifers meeting tight specifications have consistently fared better. Going forward, this continuing development may put the economics of finishing young bulls under even more pressure.

Higher weights offset lower numbers

Entirely as a result of lower supplies in Northern Ireland and Scotland, UK prime cattle throughputs were 1% back on the year at 200,000 head. In England and Wales, throughputs were recorded as being up 4% on the year. While heifer throughputs were back 1% and steers back 2%, the number of young bulls processed was up 2% compared with January 2013, as numbers in Scotland and Northern Ireland were significantly higher. All regions of the UK recorded lower numbers. Steer and heifer carcase weights during the month were higher year on year, offsetting the lower numbers of cattle processed to a large extent. As a result, at 62,000 tonnes, production from prime cattle was similar to that in January last year.

Long term beef and veal supply expected to be tight

Supply of beef and veal in the UK this year is expected to be modestly up on last year’s position, although indications for the longer term still suggest a fundamentally tight supply situation will be maintained. The key driver of this comes from the results of the DEFRA June 2013 census, which recorded a decline in dairy and suckler breeding herds compared to the previous year. In addition, while the census did record an increased number of female beef cattle between 1 and 2 years of age, with higher heifer slaughter in 2013 it is likely most of these were destined for slaughter rather than for breeding.

Global Snapshot

• Brazil – Beef exports are down on expectations for March

• Argentina – Exports down by 18% in the first quarter for 2014

• North America – Increased cattle placements increase feed prices

• Australia – Has reported a good start to its 2014 season with increased live cattle exports

• New Zealand – Lamb production is still poor following the effects of recent drought

• EU – Exports into Russia back 35%

UK Lamb

Lamb prices stronger on tightened supplies

Despite falling marginally in the latest week, lamb prices are considerably stronger than they were throughout the start of the year. At 191.9p/kg, the latest GB SQQ, for week ended 22 February, was down less than a penny on the previous week. At this level prices are over 16p higher than they were in mid-January. This strengthening has come as lamb supplies have been reportedly tight. However, the better prices have now started to draw more lambs out, which has had some negative impact on prices in the latest week. As well as the prime lamb trade strengthening, cull ewe values have increased considerably since the middle of January. At £60 per head the latest average cull ewe price was almost £11 higher than the average in the middle of January.

Similarly, store lamb values have strengthened on the back of better prime prices. At over £61 per head, the average value of old season store lambs in GB has increased by almost £6 per head since early January. UK exports in 2014 are forecast to be almost 5% lower than the very strong levels recorded in 2013. As a result, the supplies available for consumption in the UK for 2014 are expected to be down by approximately 4% on 2013 levels. This is broadly in line with the new supply levels the UK has experienced from 2010 onwards. Looking at domestic and global patterns there remains little chance that that the UK will return to the much higher levels that were experienced prior to 2010.

NZ/Imported Lamb Imports supply hit by drought

New Zealand lamb prices start to ease

Following the usual pre-Easter spike lamb prices in New Zealand have now started to ease. However, they remain approximately 25% higher than they were last year. While prices are stronger than the low levels of a year ago, they remain lower than they were in the corresponding period of both 2012 and 2011. Availability however remains tight.

Australian forecasts paint encouraging picture for world lamb trade

With tight supplies globally and robust demand in key markets, the expectation is that the sheep sector will experience a better year. With Australia one of the two key global exporters, it is safe to assume that these market conditions can be applied to the sheep sector globally. With tight supplies forecast in both Australia and New Zealand the global supply situation appears to be favourable for the UK sector. With less product available on the world market, imports for the UK are forecast to be lower, resulting in a tightened supply scenario at home. At the same time, these lower global supplies will potentially result in increased demand for UK product in the key export markets.

Pork

UK pig price

UK finished pig prices have recently come under pressure after the African Swine Fever (ASF) outbreak in the EU caused prices to drop across the continent. In addition to this, prices are normally expected to decline during the first couple of months of the year as consumer demand is subdued. Pig prices in February averaged at 164.17p per kg, up 5% on the previous year for the same month. However, while prices are keeping above the 2013 levels, the annual difference has narrowed in recent weeks. Pig prices in March continued to fall to reach 162.56p per kg for the week ended 15 March, still up 6p (4%) on the same week a year earlier.

EU Pork

The EU pig price declined steadily during February with the average for the month amounting to €160.41 per 100kg. This was around €3 per 100kg lower compared with the average for January. This is against the typical seasonal trend whereby prices across the continent normally strengthen from February onwards. The recent pressure on the EU pig market has been a result of the Russian import ban on EU product as a result of the African Swine Fever cases in Poland and Lithuania. Compared with the week ended 9 February the EU pig price fell by €8 to by the week ended 9 March, although it recovered somewhat in the following week to stand at €153.85 per 100kg. The UK market has held up much better and although the deteriorating market on the continent has had some impact, the gap compared with the EU average has further widened to nearly €40 per 100 kg by early March.

Poultry

Chicken prices for EU are firming, due to lack of raw material within Western Europe as stocking densities have been reduced from 42 birds per sq. metre to 36. This has taken around 15% of live birds out of the killing programme, which in-turn has put pressure availability forcing prices upward.

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