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AHDB Cattle and Sheep Weekly

10 February 2015

EBLEX Cattle and Sheep Weekly - 10 February 2015EBLEX Cattle and Sheep Weekly - 10 February 2015

Stability in the cattle trade for another week

In week ended 31 January, the prime cattle trade was broadly unchanged on the previous week. The anticipated January slowdown in consumer demand may just be starting to take the edge off trade, keeping a lid on any upwards pressure on price. With estimates suggesting that the number of cattle coming forward in the week was around 700 head lower than a week earlier, the market is continuing to demonstrate a degree of balance at the moment. The overall GB prime cattle average price edged up a fraction to 363.8p/kg. Steers levelled at 365.1p/kg, while those falling within the R4L specification moved up almost a penny to be back to their highest point in almost a year at 374.9p/kg

Cow prices were firm for another week. The overall GB deadweight cow price was up almost 2p on the week earlier at 223.4p/kg. This comes as slaughtering estimates indicate around 700 fewer cows came forward compared with the previous week. With trade demonstrating robust demand at the moment, reports suggest that producers are still adding finish to those cows that they are able to, in order to take advantage of the better prices on offer for better fleshed cows.

Beef sales benefit from promotional activity

Grocery expenditure was up almost 2% at Christmas, boosted by a fall in prices. It would appear that consumers took advantage of this by stocking up on volumes over the festive period. Retailers drove the lower end of the grocery price tier market through price cuts but trading-up was a key feature. According to the latest data from Kantar Worldpanel, fresh beef was up on the year in both expenditure and volume terms over the Christmas period, as more households bought beef more often. Over half of households bought fresh beef in the four week period to 4 January 2015 and there was some switching to beef evident from all meats, particularly lamb and pork. Strong promotional activity from key retailers drove an increased amount of roasting joint purchases. Meanwhile, stewing beef purchases also experienced both expenditure and volume growth, following declines at the end of 2013.

The biggest winners in terms of year on year growth were at opposite ends of the retail spectrum, the hard discounters and premium retailers. The largest volume gains came from one of the Big 4 retailers but this was against a backdrop of a poor 2013 Christmas performance. A more detailed review of Christmas performance will be available in the Cattle and Sheep Market Update published at the end of the month.

Lamb prices strengthen again

Having edged back last week, liveweight lamb prices have rebounded this week, likely helped by some tightening of numbers. In week ended 4 February, the GB SQQ at GB auction marts increased by almost 4p/kg on the week to average 189.4p/kg. This came as the number of lambs forward fell by over 15%. By the end of the week, prices were still strengthening, with the SQQ on Wednesday 4 February increasing 10p/kg on the week to average 192.0p/kg. Stronger prices have also continued into Thursday, with the provisional (5pm) SQQ showing an uplift of 12p/kg on the week at 197.9p/kg. With fewer cull ewes forward, the average value for week ended 4 February was up £2 on the week at £75.55 per head. Combined with the robustness in the lamb trade, this indicates that demand for sheep meat at the moment is relatively strong, which, as we head towards Easter, may generate some optimism amongst producers.

Whilst also remaining relatively firm and still tracking above year earlier levels, the deadweight lamb trade followed the trend of the liveweight trade last week and eased back. In week ended 31 January, at 416.4p/kg, the SQQ came back 8p on the week. For another week, estimates suggest that fewer lambs came forward compared to the week before but, consistent with most of the year so far, numbers were still ahead of a year earlier.

Increased roasting joint sales drive Christmas performance

According to latest data from Kantar Worldpanel, in the four weeks to 4 January 2015 household purchases of lamb increased almost 3% on the corresponding period last year. However, there was little change in overall expenditure on lamb over the Christmas period. Most of the uplift in volume purchases came from increased sales of leg roasting joints. This was dominated by one of the Big 4 retailers, as a result of strong price promotional activity. In contrast, volume sales of shoulder roasting joints were significantly lower compared with last year, likely as a result of the increased promotional activity on leg roasting joints encouraging some product switching. Only one of the Big 4 retailers significantly increased their promotional activity on fresh lamb in the period and it was the only retailer to experience a growth in volume sales. The hard discounters also showed a small drop in sales, although this was on the back of notably strong growth last year.

In addition, and following the overall grocery trend, there was an increase in sales of premium quality lamb lines, albeit from a relatively small base.

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