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Market Commentary 19/02/21

This week’s prices and commentary:

At reporting Scottish abattoirs, prime cattle prices cooled more significantly after falling marginally in the previous fortnight, down 3.1p at 383.8p/kg.  This out-paced the seasonal trend lower, resulting in reduced leads over last year and the five-year average of 10.9% and 8.6% respectively.  Nevertheless, prices remained at a record high for the time of year for a third week, 1.6% above the previous high in February 2014.  South of the border there was a smaller fall of 2.1p to 371.1p/kg, leading to a reduction in the Scottish premium to a four-week low of 3.4%, two percentage points smaller than in the same week of 2020.  E&W prices averaged 13% higher than last year, with this being the lowest of the year-to-date. 

Steer grade prices mostly fell by 2-5p, with the R4L dipping by a below-average 3.1p to 387.7p/kg; and there may have been an overall reduction in carcase quality.  For heifers, reductions in grade prices were generally slightly softer than for steers, but the R4L decreased by an above-average 3.3p to 388.6p/kg.  These changes left both at a reduced 10.7% ahead of 2020 levels.  For R4L steers, prices slipped behind the levels of four weeks earlier for the first time this year, down 0.5%, but they were still 2.1% above the pre-Christmas low of eight weeks before.  The Scottish premium for R4L steers rose from 1.6% to 1.8%, due to a 3.6p fall in E&W to 380.9p/kg, and this placed it above its five-year average for the first time in three months.  

Prime cattle slaughter fell for a second week at reporting abattoirs, and more significantly, down 4.9%, dropping 7% behind year earlier levels and to a seasonally low level, holding 2.6% above their 2020-weekly average compared to a five-year average for the week of +5.2%.   Cumulative slaughter for the year-to-date fell slightly behind 2020 levels.  South of the border, numbers fell by 2.4% from a year-to-date high but remained above 2020 levels.

At auction sales in Scotland, prime cattle prices approached their levels last seen over the festive period, up 3.1p to 221p/kg.  This came despite a rise in the number traded back above last year’s weekly average; though in part this reflected a return to more normal volumes at one of the sales which usually reports an above-average price.  Prime cattle averaged 12.6% dearer than in the same week of 2020.

After three weeks of relative stability, cow prices returned to their upwards seasonal trend.  The O+3 grade averaged 3.4p higher at 280.3p/kg while -O3 grades were up 2.2p at 267.3p/kg.  Prices held around 6.5% above 2020 levels and 9.5% above their five-year average. Cow throughput at reporting abattoirs fell by 26% and was at its lowest since the festive period.  Nevertheless, it still exceeded year earlier levels by more than 30%. 

At auction sales in Scotland, cull cow marketings rebounded to a four-week high.  While beef cow values fell by around 3p on the week to just under 137p/kg, more were traded, underpinning the overall average price along with a 2p lift to 108p/kg for dairy cows.  Compared to a year earlier, beef cows were around 9% higher and dairy cows by closer to 11%.

In the Irish Republic, prime cattle slaughter continued to trend lower at a rate of around 2% per week, dropping numbers nearly a fifth behind 2020 levels.  After initially holding up well, Irish prices have now fallen more significantly, with R3 steers down 1.1%, perhaps reflecting a backlog of cattle on farm, and the year-on-year increase dipped towards 3% - its smallest since early July 2020.  Meanwhile, reflecting a slight rise in sterling, R3 steers fell by 1.2% (4.1p) to 334.2p/kg.  However, with sterling remaining firm in mid-February 2020, this translated across to a year-on-year increase of just under 8%.  Having risen steadily in recent weeks, the Scottish premium was unchanged at 15.7%, remaining above the 2020 weekly average of 14.1%.

US prime steer prices edged higher, remaining around their highest since May 2020 and reducing the year-on-year deficit to 5.3%.  In sterling, US steers were worth 287p/kg, falling slightly due to a weaker dollar.  Wholesale beef dipped around 1% after a month of strong uplift, but lean beef was still 8% dearer than last year and mid-level marbling beef nearly 13% higher.  By-product value continued its slow recovery with a 0.5% lift taking it 6% in front of 2020 levels.  Slaughter fell 6% and dropped behind 2020 by 1.6%, though higher weights meant production volumes were only a fraction lower than last year.

Snow in many parts of the country didn’t prevent an increase in store cattle marketings to their highest of the year so far.  This increase in marketings was met with a firm demand and prices pushed back towards their highs from the first week of the year.  6-12-month steers were £34 dearer at £1,018 while 12-18-month steers were nearly £32 higher at £1,098.50.  The former was a year-on-year increase of 8.7%; the latter by 6.8%.

Price reporting GB abattoirs processed 2.6% fewer 12-21.5kg hogg carcases than in the previous week.  As well as reduced numbers, increased carcase quality is likely to have supported prices, with an 18-week high 59.9% grading at R3L or better and a slightly increased 82.4% achieving an R3H or better.  Of the total, an increased 11.4% share were in the standard 12-16.4kg range and the average R3L grade was up 10p at 586.3p/kg, placing it 14.5% above the same week last year.  Meanwhile, in the medium 16.5-21.5kg range, R3L grades made 12.8p more, at 595.1p/kg, putting them up 13.2% on the same week last year. 

At Scottish auction sales, the small week-on-week lamb price increases of the previous week picked up.  This started with a 9.3p increase to 277.7p/kg on Thursday 11th, before averaging 9.7p higher at 279.6p/kg on Monday, then 6p higher at 275.3p/kg on Tuesday, ending the week up 10p on Wednesday 17th at 276.2p/kg.  Over the week, the average price exceeded year earlier levels by 15.4%.  These price increases continued into Thursday 18th, despite a weekly increase in marketings of nearly 15%, with a further lift of 4.5p to 282.2p/kg putting prices up by a fifth from the corresponding day in 2020.

The total number of lambs traded at Scottish sales fell by 4% on the week, although within this, an increased number were in the 25.5-45.5kg weight range.  Meanwhile, across GB auctions, numbers were relatively stable for a second week, edging back after a slight lift in the week before.  Nevertheless, volumes were down significantly year-on-year for a second week in Scotland, with the gap widening towards a fifth; and behind 2020 for a fourth week at GB level, down 13%. 

In France, farmgate prices continued to trend seasonally lower, with demand reportedly softening.   A faster rate of decline than last year saw the year-on-year increase decline for a second week, dipping below 9%.  At Rungis wholesale market, imported R grade carcases have remained stable throughout February so far.  While around 3% cheaper than at their mid-January peak, at €7/kg, prices were still 15% higher than in mid-December, converting to £6.06/kg on the 19th.  Rises in sterling and GB farmgate prices have seen the gap between French wholesale and GB farmgate prices close significantly in recent weeks.

Cull ewe prices rebounded at Scottish auctions after a second week of reduced marketings, which fell 7% on the back of a 5% reduction in the previous week.  Nevertheless, prices trailed year earlier levels by around 4% for the third straight week.

Prime pig prices continued to cool at GB reporting abattoirs, with carcases weighing 70-104.9kg down 0.88p at 141.32p/kg.  Reporting abattoirs handled nearly 4% fewer pigs than in the previous week, so there may have been some further outages in the processing sector.  However, carcase weights did fall back by 0.68kg to 89.84kg.  This resulted in a reduction in the average carcase price of £1.26 to £125.44, taking it 10.1% below year earlier levels, compared to a 14.2% reduction in per kilo prices.  Meanwhile, per kilo prices were around 1.5% below their five-year average but the average carcase was valued around 4.5% above its five-year average.  On the input side of the equation, while soyameal has fallen around 10% from its January peak and wheat by around 5%, feed barley has continued to climb while all three remain around 30-40% dearer than last year.

On the continent, the average grade E pig carcase price rose slightly for a second week, driven by Belgium, Spain and Poland.  As a result, the gap between the GB SPP and the EU average narrowed slightly towards 18.5%.  However, EU prices continued to average 30% down on early 2020 levels.  Wholesale prices have also shown gains for a number of cuts.  Looking forward, the recovery appears to have become more widespread, with the forecast for German pig prices pointing to a 2c/kg increase in the coming week.  In China, wholesale pork prices have fallen sharply since they were last reported in the middle of last week, with the Ministry of Agriculture resuming reporting following the Lunar New Year holiday.  Prices averaged more than 5% lower on the week, likely down to weaker demand after the celebrations, extending their year-on-year reduction to 15%.  Nevertheless, they were still 86% higher than the 2016-18 average for the week, highlighting the continuing shortage of pork.