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Strong Farmgate Beef Prices Set to Continue
Farmgate beef prices remain historically strong in the prevailing marketplace reflecting the low numbers of prime cattle on the market coupled with low carcase weights.
According to the latest analysis by Quality Meat Scotland (QMS) the prevailing market is being driven by clear market signals over carcase weight and limited outlets for beef from young bulls.
Historically, said Stuart Ashworth, QMS Head of Economics Services, young bulls contribute most to the supply chain during July and August accounting for 15% to 16% of the prime kill while they fall to 8% or 9% contribution through the winter and spring.
“This year the supply of young bulls has reduced as abattoirs have indicated less interest in young bulls over the past year and farmers reacted to the market signal,” said Mr Ashworth.
“Historically, the age of prime cattle at slaughter peaks in August and September. However, this year the current availability of steers has been reduced as producers have reacted to the call for smaller carcases by selling steers younger and lighter,” said Mr Ashworth.
Average steer carcase weights in Scotland during June were 383 kg, 8kg lighter than this time last year, said Mr Ashworth. “Young bulls were also marketed at lighter weights and heifers have also been in tight supply, although their carcase weights were unchanged as they have historically been well within the abattoirs preferred weight ranges,” he said.
In short, through June and July the UK prime beef market has faced up to reduced domestic supply.
“Calf registrations show that in the second half of 2015 Scottish calf registrations were 1% higher than 2014 and these animals will make a significant contribution to the supply over the next six months, however calf registrations in the second half of the year are less than one-third of annual Scottish calf registrations the effect on overall supply is reduced,” observed Mr Ashworth.
“The modest increase in Scottish calf registrations continued into the first half of 2016 which could suggest some small increase in stock availability as the year progresses. Overall GB calf registrations show a similar pattern. However, with a higher proportion of calvings in the second half of the year in England and Wales than Scotland supplies may lift in England and Wales before Scotland.”
Carcase weights are usually at their lowest in October and November as younger spring-born cattle of 18 to 22 months of age begin to arrive on the market, said Mr Ashworth.
“They make up a higher proportion of the prime kill and the year-on-year change in average carcase weights at this time may be more modest. Consequently, the reduction in beef production seen earlier in the year, as a result of lighter carcases, may not be as significant as we move towards Christmas,” stated Mr Ashworth.
While the current market is being helped by lower domestic beef production it is also being supported by Sterling’s weakness. This has encouraged greater export activity and reduced the competitiveness of imported product.
“The latest customs data showed a three percent growth in the volume of beef exports during May with useful growth in shipments outside of the EU, although the EU remains by far our most important export market.
“Across Europe producer prices are currently around 3-4% higher than this time last year, while after adjusting for exchange rate movement GB producer price is similarly around 3% higher.”
Ireland sent more beef to the UK than last year between February and the end of May, said Mr Ashworth. “Nevertheless, overall beef imports have declined and with exports increasing and domestic production falling there has been a basic strength in the market which has supported firm prices for most of this year and is likely to continue to do so in the short term.”
For further press information please contact Lisa Fleming, on 0131 472 4046 or mobile: 07734 110 351, email: email@example.com