February 29, 2012

UK beef market seen to remain firm

The latest EBLEX annual market outlook predicts a notably firm beef market for the UK this year as imports are expected to remain well below 2010 levels while continental demand continues to fuel exports.

Following an increase in 2010, final results from the most recent June census show a fall of around 2% in UK cattle numbers on the previous year, the bulk of this being in animals less than two years old.

The census figures indicate the national beef breeding herd stabilised over the past year. However, an apparent rise in slaughtering of both heifers and cows suggests this is likely to be a temporary position. Despite recent store cattle returns improving the sector's optimism, high feed costs, a shift in the balance of cow and sheep numbers and competition from arable enterprises means a decline in the suckler herd, anticipated in 2011 when final figures are confirmed, with numbers returning to 2009 levels by the end of this year.

Equally, the dairy herd is forecast to have fallen by around 1.5% in 2011 with expectations of a similar reduction in 2012, further limiting national supplies.

Although calf registrations were marginally higher in 2011 than the previous year, high cereal prices had a clear impact on demand, with registered purebred dairy bull calf births lower on-year.

Any rises in cereal prices are considered likely to dampen dairy bull calf demand despite the attractiveness of the current finished market.

As well as a continued tightness in domestic beef supplies, imports are expected to continue to remain below previous years in 2012 while firm demand from continental Europe is forecast to result in a second year of relatively high exports.

Strong export demand is predicted for manufacturing beef, in particular, helping to support the cull cow trade alongside UK prime beef markets, despite any fall off in domestic consumption as a result of further pressures on household budgets.