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AHDB Cattle and Sheep Weekly

27 March 2015

EBLEX Cattle and Sheep Weekly - 27 March 2015EBLEX Cattle and Sheep Weekly - 27 March 2015

Cattle trade eases again

In week ending 21 March, prime cattle prices came back again as the market continues to be finely balanced between supply and demand. Prices for most types of cattle were down on the previous week. The overall steer price was back 4p to 354.3p/kg, while the average heifer price eased a penny to 356.8p/kg. Young bull prices also came back as buyers continued to be more selective. Consequently, the all prime average was down 2p at

In addition, cow prices fell for the second consecutive week, with the all cow average back another 2p to 229.7p/kg. It has been suggested that the robust demand for cows has arisen from an increase in demand from retailers for cheaper cuts of beef. Given the current decline in prime cattle prices, the opportunity for some product substitution may have had an effect on the demand for cows.

Tight supplies in Ireland may provide some good news to UK producers amid concerns that the current weakening in prices could be signal a return to a similar situation to last year. According to Bord Bia, the favourable exchange rate has resulted in live exports to Northern Ireland increasing significantly this year. In the latest week, processors have increased prices by 5-10 c/kg due to tight supplies.

Overall, Bord Bia is forecasting supplies at export plants to be down 150,000 head this year, which is likely to result in exports declining notably. From the UK perspective, the impact of this will depend on how the price differential moves, affecting the ability of imported product to compete. So far this year, the gap has fluctuated between 60 and 75p/kg which is still relatively wide in historic terms.

Increase in steer throughputs slows again

UK prime cattle slaughterings in February were unchanged on the year at 155,500 head. While steer throughputs are still tracking above year earlier levels, the year-on-year uplift has slowed for the second month in a row. In the UK as a whole, the uplift was just 7%. This represents only the second sub-10% increase since July last year, the first being in January. This development is starting to give some evidence that supplies may be beginning to tighten. Adult cattle throughputs were up across all the regions of the UK with the exception of Northern Ireland. Trade during the month was firm, especially for cows of beef origin. It appears as though the challenges in the dairy sector may be resulting in an increase in the number of cows coming forward. At 71,000 tonnes, beef and veal production was up 2% year on year.


Has the fine balance in the lamb trade tipped?

As Easter approached, despite prices tracking just below last year’s position, the lamb trade has held up relatively well, given the number of lambs available. While it appears that demand has been underpinning trade to some extent, with procurement for Easter ending, the market remains very finely balanced. As old season lambs have come forward in higher numbers, there has been some downwards pressure on price at GB auction marts in the latest week. In week ended 25 March, at 197.2p/kg the GB OSL SQQ dropped over 3p on the week. Notably, trade on Wednesday 25 was back around 10p on the week and indications for Thursday 26 suggest a similar week on week fall. Despite this pressure on the lamb trade, the cull ewe market maintained its positivity as the reduced numbers forward continue to have an impact. At £86 per head, the average was up £2 on the week to be £13 ahead of year earlier levels.

Short term, there is some potential to mitigate the downwards pressure on lamb prices. A significant proportion of the lambs carried over into this year have now gone through the system. In the first two months of the year, almost 165,000 extra lambs were processed. It is reasonable to assume that many of the remainder will have been marketed in March, especially with an earlier Easter this year. Consequently, if the expected increased supplies from New Zealand hit the market as the old season trade tails off and before the new season trade establishes itself, its effect ought to be less damaging.

Higher lamb slaughter continues in February

At 890,000 head, UK lamb slaughterings in February were 11%, or 88,000 head, up on the year. This represents the eleventh consecutive month in which throughputs have been higher year on year. Since June, lamb slaughterings are now up almost 550,000 head on the same period in 2013/14. Notably, the uplift was entirely as a result of an increase in throughputs in Great Britain as, for another month, throughputs in Northern Ireland were lower than a year earlier. With the reduced impetus to reduce breeding flocks continuing, UK adult sheep slaughterings in February were again lower on the year, being back 21% at 114,400 head.

Clean sheep carcase weights were well above seasonal norms last year. This development has continued so far in 2015 on the back of high forage availability and relatively low prices for bought-in feed. Combined with the increased lamb throughputs, this offset the lower adult kill and sheep meat production was up 6% on the year at 20,800 tonnes.

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