Mixed outlook for beef and lamb markets in coming year

The Agriculture & Horticulture Development Board’s (AHDB) Livestock Outlook conference embraced the digital age this year, and moved online for the first time. 

More than 150 delegates joined the digital AHDB Livestock Outlook to learn about the latest analysis from experts across the meat industry. Outlooks for beef, lamb and pork, as well as feed grains, over the next year were all topics of conversation during the digital conference, with a presentation discussing the impact that Brexit could have for the livestock sectors.

“The Outlook event has always been a source of vital information for delegates to make informed business decisions based on the global market environment,” said AHDB Pork strategy director Mick Sloyan, who chaired the event. “By moving it online, we have been able to reach a wider group of levy payers, all at their own convenience.”

Since the webinar, presentations have been viewed more than 300 times, with feedback being largely positive.

Tighter supplies of beef

Senior analyst Debbie Butcher discussed how overall beef supplies for the coming year are expected to be tighter than last year, with production forecast to drop 2% to 890,000 tonnes. This could support the market.

While prime cattle numbers are expected to rise by 1% reaching almost two million head, the demand for lower carcase weights and a sharp decline in the dairy herd means that this will not result in higher production.

Dairy cow numbers are set to fall by 8% to 615,000 head, although suckler herds will remain stable. However, uncertainty caused by Brexit means they will have to rely heavily on the market for returns.
 
Exports were highlighted as an area of positivity, aided by the drop in value of sterling and the effect this has had against Ireland – Britain’s major competitor. Despite this, if market inflation results in price increases in the chiller aisles, consumers could be influenced to look at other options.

“The picture for UK beef looks comparatively optimistic, but domestic consumption could throw up some challenges,” explained Butcher. “It’s reasonable to expect that food prices will be trending higher this year and that may change behaviours.

“Although beef sales were up 6% to January, lower retail prices meant the value of the market remained static. We are in the higher-value protein mix and that makes us vulnerable.”

Increased lamb production

In contrast to the beef outlook for 2017, lamb production is forecast to rise. This could subsequently put downward pressure on prices. While a weak sterling is predicted to give continued support to the UK’s position in export markets, it is unlikely to offset the impact of increased supply.

In June last year the number of on-farm lambs increased to 312,000 head compared to a year previous. However, finishings slowed down due to poor pasture conditions, which led to lower levels of slaughterings for the second half of 2016.

The stock carryover, coupled with a rise in the size of the breeding flock, has resulted in an expected increase in slaughterings for 2017, with carcase weights expected to be heavier, meaning that overall sheep production will be increased.

Because of the tightened New Zealand lamb supply and the weakness of the sterling, imports are set to drop due to it becoming a more costly option. Exports are expected to rise overall, with growth in demand in Germany, Scandinavia and Poland balancing a decrease in demand from France, a large customer for the UK. Mark Kozlowski, AHDB senior analyst, said it expected these factors would not be enough to counteract the supply chain.

“An increase in supplies is likely to put pressure on the market, so making sure lambs are in spec for their market will be crucial in ensuring both higher returns for producers and a consistent product for consumers,” he said. 

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