Prime cattle see a rise in prices

Prime cattle prices have risen 8% in the past four weeks, according to analysis from Quality Meat Scotland (QMS). 

“Scottish producers are seeing prices for cattle that are 7% higher per kilo than this time last year,” said QMS head of economics services Stuart Ashworth. “Given the continuing trend for carcases to be heavier than last year, the market return per animal will have increased by more than 7% on the year.”

Price-reporting abattoirs in Scotland have shown a 25% decline in the number of young bulls slaughtered, compared to a year ago. Meanwhile, there has been a 7% decline in the number of heifers slaughtered.
Several contributing factors have resulted in a change in the market over the past month.

Ashworth continued: “Compared to a month ago, steer and heifer numbers are down and young bull numbers are up. Historically, though, this is the time of year when young bulls are most important in the overall kill.”

Despite this, price-reporting abattoirs in England and Wales claimed they had seen an increase in heifer and steers (a castrated male calf) slaughtered over the past month, although young bull numbers were down compared to a year ago.

“In broad terms, then, cattle are in tighter supply in Scotland than in England and Wales. So the basic rule of economics – namely reduced supply chases price higher – is currently at play.

“But if we look back a month, or indeed a quarter, the number of cattle being handled by Scottish abattoirs was also lower than 12 months earlier and, despite heavier carcase weights, the volume of beef leaving abattoirs was also lower than 12 months earlier – but prices were sliding.”

Ashworth believes the balance of trade is why tighter supply is driving prices higher now rather than earlier in the year. “Unfortunately trade data takes some time to be collated, but reviewing the data available to the end of May shows us the combined effect of changes in trade and changes in abattoir production.

“This resulted in more beef on the home market than in 2014 for the first quarter of 2015, but less, and an increasing deficit, through April and May. So basic economics is at play, in that the total amount of beef on the home market has now fallen below the levels seen in 2014 and the producer price has responded as expected.”

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