• Image 2
  • Image 8
  • Image 12
  • Image 11
  • Image 30
  • Image 28
  • Image 10
  • Image 27
  • Image 13
  • Image 14
  • Image 2
  • Image 8
  • Image 12
  • Image 11
  • Image 30
  • Image 28
  • Image 10
  • Image 27
  • Image 13
  • Image 14
  

UK Beef

Cattle trade still fairly robust

Relative to this time last year, deadweight cattle prices are still lower. However, the trade has demonstrated some marked improvements over the past few months. The market has been robust throughout the Christmas procurement period and, despite higher throughputs, has continued to edge upwards. In week ended 12 December, at 353.5p/kg the overall GB average deadweight prime cattle price had increased 14p since the start of September, while steers falling within the R4L specification had moved up 15p to be around 365.0p/kg.

Reports suggest that there is still robust competition in a finely balanced market for consignments of cattle fitting supermarket specification. Despite carrying high stocks into the holiday period, processors are still looking to ensure they have adequate supplies of product to meet their retail commitments into the early period of the New Year. With AHDB/EBLEX slaughtering estimates indicating that throughputs of steers continue to be well ahead of year earlier levels, the fact that farmgate prices have held up fairly well could indicate somewhat better consumer demand at retail level.

Following the trend throughout the summer, the better conditions have once again had a positive influence on carcase weights for all types of cattle and, consequently, on production levels. Steers and heifers were 4kg and 6kg heavier respectively, while young bulls were 8kg heavier. UK beef and veal production from prime cattle for the month was up over 4%, on the year to 55,700 tonnes. At 17,600 tonnes, production from adult cattle was a fraction back on the year. Despite cows being 3kg heavier year on year this was mitigated by mitigated lower throughputs. As a result, total beef and veal production was up 3% year on year to 73,700 tonnes. This takes year to date production to 814,000 tonnes, up 27,000 tonnes on the year.

Global Snapshot

EU still a net importer of beef and veal

The increased EU supply situation in 2014 means that, in the year to October, the EU has imported only a fraction more beef and veal from elsewhere. While from some locations, such as Uruguay, Argentina, Namibia and Botswana, shipments were lower, from Brazil and Australia they were higher. In the case of Brazil, shipments were up just 3% but imports to Italy and the Netherlands, the two main destinations, were back on the year. The main recipient of increased Brazilian product has been Germany. However, despite the overall increase in volumes, the EU still remains only a relatively minor market for Brazil, as it has been since 2007. Also, while Brazil remains the primary supplier to the EU it is also the sole major beef producer not banned by Russia. Looking ahead, this could result in higher shipments to Russia at the expense of the EU.

UK Lamb

Lamb trade still firm

The lamb trade has been relatively robust during December so far –it would appear that the balance in the trade has continued to be in producers’ favour even after the Christmas show and sale season came to an end. With prices gathering pace over recent weeks, it would appear that some degree of seasonality has returned to the trade, something not evident on the run into Christmas for the past couple of years. Midway through November, the liveweight SQQ at GB auction marts moved above year earlier levels for the first time since June and it has maintained this position on the run into Christmas. At 181.5p/kg in week ended 20 December, the SQQ had moved up over 30p since the low point of the year in late September. The buoyant trade has come despite a rise in the number of lambs being marketed, indicating that demand is holding up well ahead of Christmas, possibly as the weather has turned colder.

Imported Lamb

Sheep meat imports lower

According to HMRC, the latest data indicates that UK sheep meat imports in October were behind year earlier levels again. At 3,800 tonnes, shipments during the month were back 19% on the year. This was largely a result of a 16% drop in volumes from New Zealand, although Irish and Spanish shipments were also lower. The gap was only fractionally filled by Australian sheep meat - imports from here were up 15% on October 2013 levels. In line with the year to date, import prices were again well up on a year earlier. At £4,260 per tonne, the average price was 13% higher than in October last year. While, in a change to last month, the volume of frozen bone-in cuts declined compared with the year earlier, they still accounted for a greater share of the import mix overall.

Free Trade Agreements with China

There has been a big increase in Chinese beef and sheep meat imports in the last five years and, as a result, the market represents a major opportunity for global exporters. This trade has largely been dominated by Australia and New Zealand. Both these countries have now negotiated Free Trade Agreements (FTAs) with China which give them a competitive advantage over other potential suppliers.

Pork

UK pig prices

Based on AHDB/BPEX estimates, the average cost of pig production in Great Britain during the third quarter of 2014 was just under 144p/kg (carcase weight). This was around 10p lower than the estimate for the previous quarter, driven by the fall in global cereals prices as this summer’s harvest became reality. This is the lowest estimate of production costs since the final quarter of 2010. As a result, despite pig prices falling steadily between July and September, average producer margins remained positive. With the DAPP averaging nearly 159p/kg during the three month period, producers would have made a positive margin of around £12 per head during the quarter. Although this paints a relatively positive picture for producers, since September pig prices have continued to fall while grain prices have started to rise again. With the APP falling below 150p/kg in mid-November and the SPP around 3-4p below that, many producers are likely to be close to their break-even point. Some, particularly those selling pigs through the spot market, are probably already losing money again. Unless the market direction changes, more producers will find themselves in this position by early 2015.

Global pork

Emerging markets support EU exports but for how long?

Russia’s ban on imports of EU pork has undoubtedly had a major impact on the pig market. However, EU pork exports have held up relatively well, with volumes down only 5% during the first nine months of the year and prices down less than 1%. Given that the Russian Customs Union accounted for 28% of EU pork exports (335,000 tonnes, equivalent to 2% of EU production) in January-September 2013, this shows the adaptability of EU exporters.

Much of the excess pork was diverted to the established markets in Asia, China/Hong Kong, Japan and Korea. These three markets took 145,000 tonnes more EU pork between January and September this year. However, that still left nearly 200,000 tonnes of EU pork requiring a new home.

Poultry

Fresh chicken sales slip as consumers chase alternatives

Almost £12m was wiped from the value of sales of fresh chicken in the run up to Christmas, with consumers cutting back on purchases. According to the latest set of Kantar World-panel statistics, which cover the 12 weeks to 8 December, the sale of chicken lost 2.7% of its value when compared with the same period of 2013. Volume also fell back 2%

One factor that has been cited is growth in spending power as the economy improves, and the decreasing ratio between income and the cost of food. Both could be driving people to buy more red meat this coupled with the festive move towards it being the main meal centre has seen poultry meat decline with most of the more expensive cuts being heavily discounted.

As we move into January we will see this trend reverse as white meat and its association to low fat & a healthy diet always features heavily in the populations New Year’s resolutions.

Download the January/February Report 2015 as a PDF file