March 5, 2009
EU cattle herd to resume contracting in 2009
Declining EU milk prices and relatively high carcass prices are expected to increase slaughter this year. As a consequence, the EU cattle herd is forecast to resume its long-term trend of contraction during 2009, according to a US Department of Agriculture attache report posted Wednesday (March 4) on the Foreign Agricultural Services Web site.
The elevated supply of pork in 2007, in combination with EC funding, boosted EU pork exports in 2008 to a record level of 1.7 million tonnes. As a result of tight margins, pork production declined in 2008 and is not expected to recover in 2009.
Induced by the high milk and beef prices, the EU cattle herd increased during 2007 and 2008. The herd is expected to have reached its peak size by the end of 2008. Due to reduced slaughtering and restricted imports from Brazil, EU beef supply tightened during 2008. Despite the limited supply, EU exports rose, fulfilling the increased demand in Russia and Switzerland. This year, slaughtering is expected to increase as a result of declining milk prices and relatively high carcass prices. As a consequence, the EU cattle herd is forecast to resume its long term trend of contraction during 2009. Due to the increased slaughtering and to a lesser extent, recovering imports, beef supply on the EU market is expected to expand, benefitting domestic consumption. As a result of the financial crisis, EU beef exports are expected to decline in 2009.
During 2007 and the beginning of 2008, margins in the swine sector shrunk due to the high feed prices and oversupply of pork. Lower pig production and slaughtering during the course of 2008 eventually lead to higher carcass prices. As margins are expected to increase only moderately, a recovery of pork production is not expected in 2009. The elevated production of pork in 2007, in combination with EC funding, boosted EU pork exports in 2008 to a record level of 1.7 million tonnes. With a lower supply of pork and the financial crisis affecting demand on the main export markets, EU exports are anticipated to fall in 2009.
