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AHDB Cattle and Sheep Weekly


03 November 2014

EBLEX Cattle and Sheep Weekly - 31 October 2014EBLEX Cattle and Sheep Weekly - 31 October 2014


Cattle Weekly

Further stabilisation in the prime cattle trade

In week ended 25 October, the prime cattle trade broadly levelled for another week. Despite AHDB/EBLEX estimates indicating fewer prime cattle came forward, compared with a week earlier, the GB all prime deadweight average stabilised at 348.7p/kg. For another week, this indicates that supply and demand are broadly matched. Steer throughputs were estimated to be back around 300 head on the week, while heifer numbers were back 400 head. Prices for cattle falling into target specification, were virtually unchanged on the week with R4Ls at 360.2p/kg and 359.1p.kg respectively. Despite this stability, reports suggest that, with processors gearing up requirements for Christmas, firmer demand is starting to filter through, in particular for those cattle with better confirmation.

 

Prospects of a firmer market next year

The latest AHDB/EBLEX forecasts for beef and veal indicate that 2015 will be a year of lower cattle availability and reduced production. Combined with robust exports and lower imports, supplies available on the UK market next year are forecast to be lower than in 2014. It means that the UK beef market should be under less pressure than it has been for much of this year and the possibility of firmer prices is improved. However, while the UK appears to be leaving the economic crisis behind, wage increases remain below inflation, which may continue to put consumers under financial pressure. In the short term, it seems possible that price-conscious domestic consumers will continue to drive towards cheaper shopping baskets, offering some challenge for beef consumption. Irish beef and veal production increases At 158,800 head, Irish cattle slaughterings in September were up 10%, or 13,900 head, compared with September last year.

With carcase weights staying higher, beef and veal production increased by almost 12% to 53,300 tonnes. While this is still a significant uplift on year earlier levels it is well behind the increases in the March to June periodwhen Irish cattle supplies were at their most abundant. However, price pressure on the Irish market has persisted, which continues to offer some risk that the price differential could impact on the UK market. The differential did narrow earlier in the year from the 70-75p/ kg high in autumn last year. However, in recent weeks, with UK farmgate prices edging up while Irish prices have broadly levelled, the differential has begun to widen again and has been consistently over 70p/kg in October so far.

Sheep Weekly

Prices strengthen despite increased throughputs

The supply/demand balance was most definitely in producers’ favour this week. Despite a considerable increase in throughputs, the SQQ at GB auction markets still moved up. Reports suggest that domestic retail promotions are going some way in mitigating the challenge offered to export performance on the back of the continued strong value of sterling against the euro. In week ended 29 October, while the number of lambs penned nationally reached somewhere in the region of 135,000, up 13% on the previous week, the liveweight GB NSL SQQ was up 5p to 159.6p/kg. Although the trade started off strongly on Thursday 23 October at 158.2p/kg, prices really strengthened after the weekend, with the SQQ on Monday and Wednesday of this week at 161.0p/kg. The SQQ is now back to the same level it was in late August but it is still down around 13p on the same week in 2013.

Deadweight prices this week have also edged up following relative stability throughout the month so far. The GB NSL averaged 354.9p/kg in week ended 25 October, up 2p on the previous week. UK lamb supplies set to remain plentiful Recently released figures for the UK sheep flock confirm that this year’s lamb crop was larger than in recent years, given a larger breeding flock in December and better seasonal conditions. With all these extra lambs around, it is no surprise that new AHDB/EBLEX forecasts show an increase in lamb slaughterings forthe remainder of this season. Adding further to supplies in the short-term, carcase weights are expected to remain above seasonal norms, as has been the case in recent months. With only small changes expected in the balance of trade, domestic production will be the main driver of supplies on the UK market.

As a result, the amount of sheep meat available for consumption is forecast to rise in 2015 by a similar amount to this year. Irish sheep slaughterings up this season Similar to the United Kingdom, Ireland is reported to have had an excellent lamb crop this season so far. Both slaughterings and production in the May to September period were up 8% year on year. The extent of the increase in the lamb crop is not entirely clear, as the June 2014 census results are surprising in that they show a fall in the number of lambs in the flock. Assuming industry expectations are correct, there should be year-on-year growth in Irish sheep meat exports in the coming months, suggesting on-going competition in the short term with British lamb on export markets.

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