July 10, 2023
In recent weeks, prime cattle prices in Scotland have faced downward pressure at abattoirs, with a decline of 2.8% in R4L grade steer prices from their peak in May to 497.3p/kg in the week ending June 24, Meat Management reported.
Despite the decrease, prices remain 9% higher than the same period in 2022 and maintain a 24% lead over the five-year average, according to market commentary from Quality Meat Scotland (QMS).
The drop in prices can be attributed to a short-term seasonal increase in supply, which is not limited to Scotland alone, as highlighted by Iain Macdonald, market intelligence manager at QMS. While the prime cattle slaughter in Scotland has been impacted by supply chain challenges, the number of cattle at price reporting abattoirs in England and Wales has been above the year-to-date average in six of the past seven weeks, reaching its third-highest level of the year by June 24.
The availability of weekly slaughter is expected to tighten over the summer as the 2021 calf crop exceeds two years of age. But the presence of young bulls born in spring 2022 will partially offset this tightening of supply.
The increase in prime cattle numbers on farms across Great Britain, as indicated by the 1st April BCMS cattle population data, has contributed to the seasonal lift in availability. While Scotland has seen a significant decrease of 2.5% compared to the previous year, there has been a 2.3% increase in numbers in England and Wales.
The impact on availability for slaughter is likely to be stronger due to a 6% increase in the 24–30-month age group, which accounts for a significant portion of prime cattle slaughter in the second quarter of the year. This increase has created short-term upward pressure on availability.
Farmers who have purchased inputs on contract or in compound form may take longer to benefit from falling commodity prices, as the positive impact on margins will be delayed.
Competition between processors for cattle has softened due to demand-side pressures, particularly affecting the lower-value parts of the carcass sold to the food manufacturing sector. This has also led to a decline of approximately 2-3% in cow prices from their peak in May, despite the fact that prices typically stabilize at their seasonal highs during this time of year.
The Scottish R4L steer price has opened up a significant lead over EU levels, particularly in comparison to the Irish Republic, where R3 steer prices have fallen by 4.3% since April. This has created a 14% price difference and added to competitive pressures, especially with the rise of the sterling against the US dollar.
The EU beef market has experienced a softening of demand despite tight supply. In the first quarter of 2023, EU beef production declined by 3.7% year-on-year, with data pointing to a further decline of approximately 5% in April.
Global commodity price reductions, coupled with a stronger sterling, have contributed to lower import and export prices, particularly for lower-value cuts that are price-sensitive.
Looking ahead, prime cattle availability in Scotland is expected to remain below 2022 levels in the second half of the year, with a softened pace of decline. In England, the pace of year-on-year increase is also set to slow down. The availability of store cattle is projected to remain tight in autumn 2023, and strong demand for Scottish-born calves is expected from finishers based in England.
In the long term, availability for slaughter is anticipated to be slightly lower across Great Britain in 2024, while the 2023 spring calf crop suggests a smaller reduction in supply in late 2024 and early 2025 than previously expected.
While the number of beef-sired females over 30 months of age on Scottish farms has decreased, beef-sired registrations in the first third of the year have remained relatively stable. Total registrations have also seen a slight decline. At the GB level, registrations were down by 1.2% year-on-year in the January to April period.
- Meat Management
