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AHDB Cattle and Sheep Weekly

10 April 2015

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

Cattle trade continues to weaken

Deadweight prices for almost all cattle types were back for yet another week.

The R4L prices for steers and heifers saw a further cut of 3p and 4p respectively in week ended 4 April, resulting in average prices standing at 356.1p/kg and 354.5p/kg.

Following a cut of 6p/kg for young bulls meeting R3 specification in the previous week, the price recovered slightly to 336.5p/ kg.

As a result, the overall prime average price decreased to 346.6p/kg, a fall of just under 4p on the previous week. Overall prices have been on a downward trend for the last two months, with the prime average price for the latest week approximately 17p/kg lower than at the end of January.

Deadweight cow prices fell by 6p/kg too, indicating that the robust demand amongst processors for cows has weakened, while estimates of cow throughput were back by almost 800 head compared to the previous week, partly due to the Good Friday Bank Holiday.

Since Christmas, the demand for cows in the UK market has been driven by consumers demanding cheaper cuts of beef.

The current drop in cow prices could be driven by consumer demand decreasing for such products or a switch amongst processors to using prime beef as prices for that product decline.

Beef benefits from consumer switching

As fresh meat and poultry continue to be affected by deflationary pressure across the major categories, falling average prices supported sales of fresh beef.

In the latest three-month period, to 1 March, beef was the only red meat to record sales growth, both in volume and value terms, compared to a year earlier.

Switching has been a key factor behind the growth, with gains made from pork and lamb. The increase in sales was driven by higher purchases of roasting joints, which were 8% cheaper than in the corresponding period last year.

Price cuts were, however, big enough to offset the growth in volume sales, resulting in a fall in total consumer spending on roasting joints.

Mince also experienced a fall in the average retail price over the period, being 4% cheaper than last year. However, this did little to bolster volume purchases, which were only marginally up on the year.

Against a backdrop of heavy declines a year ago, stewing beef sales also increased. However, this masks significant difference in sales performance between retailers, largely as a result of changes in promotional activity.

Lamb trade picks up post-Easter

Old season lamb prices at GB auction markets increased in the last week, due to tight supplies during the shorter weeks and processors looking to restock following reportedly good trading in the build up to the Easter weekend.

The SQQ for old season lambs for the week ended 8 April was up 7p on the week at 199.9p/kg.

Prices remain 17p below year earlier levels, as numbers marketed so far in 2015 have been higher year on year.

The number of old season lambs penned in the week ending 8 April was down, as expected with many processors not operating on one or both of the Bank Holidays. The total number of old season lambs was down 8% compared to the previous week.

The numbers of new season lambs coming to market was lower on the week with the end of the key Easter trade, although numbers were picking up again by the end of the week.

Prices increased further in the past week, with the NS SQQ up marginally at 266.7p/kg, reflecting the current high levels of demand to restock following Easter.

Prices remain marginally up compared to last year, with the weekly NS SQQ up 8p on the price seen in the same week a year ago.

Purchases of lamb chops/steaks at a two year low

Household purchases of lamb remained in decline, both in volume and value terms, with losses of almost 10% on the year in the three-month period to 1 March.

This has largely been due to the lower availability of New Zealand product on the market over the period. Sales of home-produced lamb, in contrast, have been relatively stable since last summer, even recording a slight increase since the turn of the year.

Lamb chops/steaks recorded their lowest level of sales in volume terms for at least two years, with consumers buying reduced quantities less frequently.

Within the roasting joint category, sales of legs and shoulders both declined in volume and value terms compared with the corresponding period a year ago.

However, sales of lamb legs suffered the most, with double digit losses year on year.

In contrast, sales of lamb mince have displayed some positivity. Purchases over the four-week period have been up year-on-year since December, both in volume and value terms.

This has largely been driven by performance at the Hard Discounters and, to a lesser extent, two of the Big 4 retailers. Volume sales at the Hard Discounters are now at a level similar to three of the Big 4 retailers, accounting for 13% of the total market, up from 8% last year.

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