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AHDB Cattle and Sheep Weekly

06 March 2015

EBLEX Cattle and Sheep Weekly - 6 March 2015EBLEX Cattle and Sheep Weekly - 6 March 2015

Finely balanced trade tips over

With estimates suggesting the number of cattle coming forward was marginally up on the week, the fine balance in the trade tipped. Reports suggest that, on the back of more than adequate numbers, prices for cattle fitting specific supermarket schemes came under greater pressure than more commercial cattle. The overall GB prime cattle average price was back 2p on the week to 357.9p/kg. Steers were back 2p to 359.1p/kg, while heifers and young bulls both came back a penny to average 361.4p/kg and 326.3p/kg respectively.

Cow prices have stayed firm for another week, which continues to indicate robust demand at home and abroad. While the all cow average price edged up a fraction to 234.5p/kg, prices for better fleshed cows at -04L specification moved up 2p on the week to average 253.3p/kg. Reaching over 250p/kg for the second consecutive week now takes better finished cows to prices last achieved in October 2013. While factors in the dairy industry still raise concerns that more cows may come forward, it is possible that the strong demand on the domestic market for cheaper cuts of beef could continue to support the trade.

Producer share of retail price a fraction lower

In February, producers received 51% of the final retail price for beef, one point less than in the month before. While this came as farmgate prices eased against retail prices edging up, it does still represent a continuation of the broader picture in which the producer has received a modestly larger share of the retail price than they did for much of last year. With tighter supplies on the horizon it is possible that the balance may be more in producers’ favour than for much of last year.

Fall in the English suckler breeding herd slows

The total number of cattle and calves in England as of 1 December was marginally back on the year at 5.31 million head. While the figures from DEFRA revealed an increase in the total breeding herd, for the second consecutive year, it masks the fact the component parts have moved in opposite directions. At 1.16 million head, the dairy herd showed a third year of growth, increasing by more than 2% on year earlier levels. In contrast, the downward trend in the beef herd has continued as concerns over profitability persist. However, the decrease was smaller than in recent years, back less than 1% to 695,000 head.

Looking at slaughter cattle numbers, supporting the outlook for tighter supplies this year, the number of male cattle on the ground over two years of age and between one and two years were both lower on the year. However, there is some potential for a modest increase in supplies in the longer term, the number of female cattle on the ground under one-year-ofage were reported to be a fraction higher on the year.

Robust lamb trade for another week

Despite throughputs at GB auction marks being broadly level, the liveweight lamb trade in week ending 4 March still moved up again. The GB SQQ edged up almost 3p to average 195.1p/kg. With demand clearly robust, prices are still just about on a par with last year’s levels. This is positive on the back of the increased supply of lambs and the continuing weak skin market. New season lambs are starting to come forward, albeit in small numbers, with prices tracking just ahead of year earlier levels - the NSL SQQ averaged 215.9p/kg in the latest week.

For another week, the cull ewe trade has been exceptional. On the back of fewer ewes forward, the average was up almost £5 per head to £83.40. It is the first time ewes have ever averaged over £80 per head in early March. The firm trade comes as the strength in the prime lamb market has impacted on other sheep prices. Additionally, adult sheep numbers are well below year earlier levels, so that available supplies have encountered hot competition at auction.

Generally the lamb trade starts to pick up around mid -February as Easter comes onto the horizon. With the Easter weekend just four weeks away, trade could start to strengthen at a faster rate over the next couple of weeks. On the flip side, it is possible that the higher supplies could keep a lid on any upwards pressure on price.

Producer share of retail price unchanged

The producer share of the retail price of lamb in February was unchanged on the month earlier at 53%. Farmgate and retail prices both moved up similarly compared with the previous month. At this level, the measure was ahead of its level in February 2014 and represents a better position than for much of the second half of 2014 when producers received less than half of the final retail price.

Still modest positivity in English sheep sector

The English sheep sector appears to be showing some modest positive signs, with the breeding flock continuing to expand. However, revisions to the DEFRA Sheep and Goat Inventory figures for 2013 mean that the positivity may not be as strong as previously thought. As of 1 December 2014, the total number of sheep in England was up almost 5% on the year at 10.82 million head. While the breeding flock was up 2% on the year to 6.5 million head, this was against a smaller breeding flock in December 2013 than was previously reported. The rise in overall sheep numbers was, as expected, largely driven by a 9%, or 370,000 head, increase in the number of other sheep and lambs, which are mostly lambs under one year. This reflects recent forecasts for more lambs to come forward in the first few months of 2015.

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