Beef prices settle following unpredictable year
Following an unpredictable 2015 for prime beef cattle prices, the market has relaxed to a level similar to that of 12 months ago, according to Quality Meat Scotland (QMS).
For the first part of the year, prices per kilogram were estimated to be 3% lower than the same period of 2014. However, this fell further to 6% in May. Juxtaposing this, prices saw a strong comeback in June and July to be 6% stronger than last year.
“This market volatility can be attributed to a number of factors,” said Stuart Ashworth, QMS head of economics services.
“Certainly for the first half of the year the UK market was well supplied with beef. In early 2015 both the number of cattle reaching abattoirs and their carcase weights were higher than 12 months earlier.”
He highlighted that although carcase weights were high, by spring the quantity of beef available from UK abattoirs fell below year-earlier levels, and was much lower during June. “Tonnages increased substantially during July and remained higher during August.”
After they had been adjusted for the market, UK supplies of beef became higher during January and February, but then lower from March to June, and once again higher in July. In addition, Kantar Worldpanel revealed that consumer demand for beef had remained similar year-on-year.
QMS believes the general trend in farmgate price is reflective of the activities in the basic supply and demand equation. When the market is well-supplied, they tend to slide, while when they are undersupplied, they subsequently rise.
“The short-term management of stocks of beef in cold stores, however, will limit the speed of price movement,” added Ashworth.
“So, although new supplies fell below last year’s levels in the spring, short-term supplies were influenced by the rundown of cold store stocks and producer prices continued to slide.”
Ashworth also observed that, by mid-May, the much lower new supplies and lower volumes in cold stores assisted in chasing producer prices higher.
During July, after they had been adjusted for trade, supplies were higher than a year earlier, while farmgate prices began to fall back. A decrease in the values of fat and hides sold by abattoirs also had an impact on prices.
Despite it all, farmgate prices rising throughout August and September points to the supply and demand balance levelling out.
“Indications of slaughter volumes during August and September suggest fewer prime animals reaching the market although cull cow numbers remain ahead of last year,” claimed Ashworth.
According to QMS, there is a trend for more purchases of beef through the autumn, followed by a demand through to spring.
Ashworth commented: “The weakening of sterling in recent weeks makes imported beef less competitive and enhances export competitiveness.”
He added that Ireland, our main overseas supplier, expected to see a tightening of slaughter supplies through the autumn. He said: “Their June census data shows a decline of around 10% in the number of cattle over two years old and a 3% decline in the one- to two-year-old age group. English census data shows a similar pattern.”
Ashworth concluded: “It is not until the under one year of age that both Ireland and England show increases in stock numbers.
“Therefore, the short-term prospects for the beef producer remains one of firm prices.”
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