February 26, 2013


UK beef, lamb demand stands firm



A clear indication of firm demand has emerged for beef and lamb in the UK with deadweight prices for cattle over the past couple of weeks moving up to stand around 7% higher on-year.


This is according to latest market information analysis by Stuart Ashworth, Head of Economics Services, Quality Meat Scotland (QMS).


Setting the scene, Ashworth said Scottish slaughter statistics for January had shown a 0.5% increase in the prime kill with an increase of 2.5% reported by Northern Ireland.


In contrast, volumes slaughtered in England and Wales were 6% lower than last year. However, carcase weights have fallen by around 2%, so across the UK as a whole, beef supplies remained 3% lower than last year during January.


"Since then the Scottish price reporting abattoirs have reported an increase of 4% in the kill compared to last year with English and Welsh price reporting abattoirs showing a 2.5% increase," said Ashworth.


"Therefore, during February the volume of beef produced is likely to have increased. With prices remaining firm, this increased supply points to an underlying strength in the marketplace."


The lamb market is also showing some strength.


"Lamb slaughter volumes across the UK during January were 125,000 head (13%) higher than last year which is beginning to make useful inroads into the increased carryover of hogs into 2013," he said.


As with cattle, carcase weights have fallen 3-4% so the increase in meat production is slightly less than the increase in stock availability. Price reporting abattoirs show that the number of hogs reaching abattoirs during February has continued to be more than 15% above last year's levels and at the same time the producer price has increased by more than 7%.


A similar pattern has emerged in Ireland where Irish export abattoirs have handled 7% more cattle and 25% more hogs since the turn of the year but market prices have improved. Irish cattle prices remain 4-6% higher than 12 months ago and although hog prices are well down on last year, they have increased since the start of the year.


A number of factors have contributed to this price improvement.


"From a UK perspective the dramatic weakening of Sterling from around €0.81 (US$1.06) per Euro at the start of the year to €0.87 (US$1.14) at the time of writing has helped our exporters.


"A tightening of supply in many European markets is also helping. For example, French beef production fell 6% in 2012 and is expected to fall a further 1.8% in 2013," he said.


Other important markets like Germany and Italy are also expected to produce less beef in the first half of 2013 than 2012, all creating further opportunity for beef exporters from the UK and Ireland.


"Similarly, French sheep meat production fell 4% in 2012 and is expected to fall a further 1% in 2013. With the Spanish ewe flock also continuing to decline, export opportunities are likely to emerge; provided the exchange rate remains favourable to the UK," said Ashworth.


On the home market, latest information from market research company, Kantar, suggests greater interest among consumers in buying prime cuts of beef. The volume of beef sold increased by 2% in the past three months compared with one year earlier despite the retail price continuing to be 4-5% higher than 12 months ago.


Retail sales of lamb have also increased significantly in the past quarter as the average retail price slipped below year earlier levels in response to the lower farm gate price. Nevertheless, the current state of the retail and currency markets suggests that current prices for cattle and sheep are sustainable.