July 18, 2023

 

EU beef production shows mixed results in Q1 2023

 

During the first quarter of 2023, beef production in the EU member states displayed mixed outcomes, with beef output across the EU-27 decreased by 4%, primarily driven by lower production in Italy, Spain, Ireland, and France, while the Netherlands and Germany witnessed growth, driven by increased cattle slaughter, UK Agriculture and Horticulture Development Board reported.

 

This drop in cattle production aligns with the wider trend of declining cattle numbers in Europe, particularly in the age category of 1-2 years old. The breeding cow herd has also seen a reduction, notably in France and Poland.

 

Despite these lower production levels, cattle prices in the EU softened slightly at the beginning of the year but have remained historically firm. But sluggish demand for beef on the continent, influenced by high inflation and cautious consumer spending, has contributed to the softening of prices.

 

A similar trend can be observed in cattle prices, fluctuating during the first few months of the year and easing from May onwards. French cattle prices have remained firm, whereas GB prices moved towards the higher end of the range.

 

Irish cattle prices have been declining since April, leading to a notable discount compared to GB cattle. The drop in Irish cattle prices is attributed to softening demand in export markets, resulting in reduced Irish beef imports to the UK and decreased exports to other EU countries.

 

Bord Bia expects Irish cattle supplies to increase in the second half of 2023, particularly in the final quarter, which may maintain current pricing trends if consumer demand remains under pressure.

 

In terms of lamb and mutton production, the top EU producers have witnessed mixed results in the first quarter of 2023. While some countries like Spain, France, and Greece reported declines in output, others, including Ireland, Italy, and the Netherlands, have increased their production. Overall, from the top five producers, output has risen by 1% year-on-year.

 

The EU sheep population has been declining since 2017, with a faster annual decline rate in recent times. Breeding ewe numbers have notably decreased in Greece and Spain but remained relatively stable in France, Ireland, and Germany.

 

Lamb prices in continental EU have remained buoyant, while Irish prices experienced pressure earlier in the year but appreciated strongly from March onwards. GB prices went through a seasonal downward trajectory in recent weeks, similar to the Spanish market.

 

Market commentary suggests that new season supplies are growing, and European consumer demand for sheep meat is somewhat lacklustre, possibly influenced by inflationary pressures.

 

EU27 trade figures indicate increased imports in the first quarter, while April volumes showed a significant decrease. Additionally, fifth quarter material returns are currently depressed, impacting supply chains.

 

The overall outlook for EU sheep meat production in 2023 indicates a decrease of just over 1% compared to 2022, influenced by the ongoing contraction in the breeding flock. Imports are expected to remain supported due to lower production and competitive overseas products. However, the future depends on EU consumption levels, considering the current macro-economic conditions. China's recovery post COVID-19 remains uncertain, though it has increased product imports from New Zealand and Australia this year.

 

-      UK Agriculture and Horticulture Development Board