April Market Overview 2014


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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