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QMS (Quality Meat Scotland)

13 April 2015

QMS (Quality Meat Scotland) March 2015QMS (Quality Meat Scotland) March 2015

QMS - Quality Meat Scotland


Prices and Supplies

Having shown stability between October and January, deadweight prime cattle prices slipped back through February. A possible reason is that stronger than expected consumer demand over the festive period meant that processors had to re-stock their chills in January, underpinning prices, but then once this process had been completed, weaker seasonal demand placed downwards pressure on producer prices. Indeed, the market has cooled despite numbers trailing year earlier levels at price reporting abattoirs for three consecutive weeks. In the final week of February, deadweight steer and heifer prices averaged 370p/kg. This was around 5p/kg (1.5%) below their October-to January level and 2-2.5% below year earlier levels.

After stabilising at around the 205p/kg lwt mark during February, the average prime cattle price at Scottish auctions fell back to 200p/kg at the beginning of March. Prices have been trading at similar levels to last year in recent weeks.

Prime cattle slaughterings continued to run ahead of year earlier levels in the opening month of 2015. Slaughterings increased by 0.5% year-on-year to 182,300 head. This was driven mainly by Northern Ireland (NI) where throughput exceeded its year earlier level by more than 8%. In Scotland, numbers edged up in line with the average, but they fell by 1.5% in England & Wales (E&W).

A shift from young bulls to steers continued to show up in the January UK slaughter data. Farmers have reacted to heavier pricing penalties for bulls falling out-with target specifications. Consequently, while the young bull kill fell 31% to 15,700 head, the steer kill was up by 9.5% at 93,600 head. Meanwhile, the heifer kill held steady at 73,000 head.

The average carcase weight for prime cattle slaughtered in UK abattoirs reached a 6-month high of 350.5kg in January. Compared to a year earlier, this was up 6kg, or 1.5%. Average carcase weights for steers and heifers rose 5kg while young bulls increased by less than 4kg. The overall 6kg increase was therefore partly down to the shift from lighter young bulls to heavier steers. Heavier carcase weights turned the 0.5% increase in kill into a 2.5% increase in prime beef production; volumes totalled 63,900t.

As noted above, Scottish abattoirs saw prime cattle supplies edge above year earlier levels at the beginning of 2015. The 0.5% increase saw throughput reach 37,200 head in January. A 1.5% increase in the steer kill more than offset a slight decrease in heifer slaughterings and a 3% decline in the young bull kill. Weekly data from the Scottish Government shows that supplies tightened in the second half of the month.

The January data for Scottish abattoirs showed that, at 369kg, the average prime cattle carcase weight was 12kg higher than in January 2014. Although young bulls were only a kilo heavier at 339kg, steers increased by 10kg to 390kg and heifers rose 15kg to 349kg. With carcase weights up more than 3% from a year earlier, Scottish abattoirs produced around 3.5% more prime beef than 12 months before.

Deadweight cull cow prices were relatively steady through January, before jumping higher in early February. This meant that in the final week of February, grade prices were generally 10-15p/kg dwt higher than they had opened the month. The overall average cull cow price closed February at 253p/kg dwt. This was up 14p on the month (6%) and by 4% year-on-year. At Scottish auctions, prices have steadied at an average of 124p/kg lwt in late February/early March following strong seasonal gains. Compared to 2014, prices have been running 5-6% higher since mid-January; though they remain well below 2013 levels.

The mature cattle kill at UK abattoirs exceeded year earlier levels for a second month in January. Slaughterings were up by 3.5% at 62,400 head. However, the average carcase weight for a cull cow was down 3kg on the year (1%). Cow beef production volumes therefore increased at the same 2.5% rate as prime production.

Total UK beef production rose nearly 2.5% year-on-year in January, reaching 84,000t.

In the 4 weeks to January 4, GB households purchased 2.5% more beef than a year earlier. The increase was driven by lower prices as overall spending was only a fraction higher. Breaking down the data into cuts shows that there were increases for roasts (2.5%), stewing beef (1%) and mince (4.5%), but a smaller volume of steak was retailed (-3%). However, households did spend 3% more money buying steaks. By contrast, the volume increases for roasts and mince were assisted by significantly lower prices.

In euro terms, Irish prime cattle prices edged back in the second half of February, but remained marginally ahead of where they had begun the month. Irish R3 steers closed the month at an average of €4.04/kg dwt (295p/kg). However, as the euro weakened significantly during February, sterling terms prices fell to their lowest level in more than 3 months. Currency movements have had a considerable impact on the competitiveness of Irish beef over the past year. Indeed, while Irish producer prices have risen by 6.5% in euro terms, they have fallen by 4.5% in sterling. As February drew to a close, Scottish prices remained 25% above Irish levels.

Most countries on the continent favour young bull production over steers. The average price for an R3 grade young bull in the EU rose 1.5% during February to €3.86/kg dwt (282p/kg). There were above average increases of 6% in Sweden and 2- 3% in Belgium, Poland, Germany and Greece. Meanwhile, in the UK, prices moved with the average, but they were relatively flat in France, Holland, Ireland, Italy and Spain. Whereas Irish prices closed February 2.5% ahead of the EU average, UK prices were 23% above it.

Although the EU average R3 grade young bull traded for 1% more than a year earlier in late February, there was significant variation. In the British Isles, prices traded up 16% in euro terms. Meanwhile, producers in Germany, Poland and Sweden saw gains of 5-7%. However, on the other hand, there were declines of around 5% in France, Italy and Spain.

Seasonal increases saw the EU average O3 grade cull cow price rise 7% during February, taking it to €2.92/kg dwt (213p/kg). This was its highest level since mid-August. The largest increases, of 13% and 16%, respectively, accrued to Dutch and German producers. There were also above average increases in the UK (7.5%) and Poland (9%). However, markets firmed more slowly in France (3%), Spain (3%) and Italy (5.5%). Irish prices were more sluggish, rising 1.5% and the market cooled slightly in Sweden. Whereas steer prices in Scotland averaged 25% above those in Ireland, the differential for cows was much smaller at 8%.

The increase in the EU average cow price during February meant that it closed the month 0.5% ahead of its year earlier level. Once again there was considerable variation amongst countries. Whereas prices were 8-9% lower year-on-year in France and Spain, they were up by a similar degree in Germany, Holland and Poland. Meanwhile, UK and Irish prices were approximately one-fifth higher than they had been at the end of February 2014.

UK beef exports finished the year on a high. December export volumes rose 13% to 10,300t; the seventh time in eight months that shipments exceeded year earlier levels.

At 9,100t in December, beef exports to the EU were up by 4% year-on-year. This was in the main driven by exports to the Irish Republic, which surged by 46% to 4,250t. Other markets showing expansion included Sweden and Denmark. By contrast, exports to Holland, France, Belgium, Italy and Germany were all significantly lower.

December trade figures for non-EU markets showed a considerable year-on-year increase, more than trebling to nearly 1,250t. Exports of frozen beef to Hong Kong accounted for 63% of the non-EU total and were up five-fold from a year earlier at 780t. By contrast, exports to Switzerland were down 9% on the year at 75t.

In the year as a whole, UK beef exports increased by 6.5% to 112,100t. However, this remained well below the levels of 2011 and 2012. Exports to EU countries were up by just over 3% to 104,000t. Meanwhile, trade with non-EU countries grew strongly to reach 8,100t. This was an increase of more than 75%. 13% of UK beef production was exported in 2014, up slightly on the year.

The UK imported 26,300t of beef during December. This was 10.5% higher than in the final month of 2013 and was the highest volume in any month for more than 10 years.

Imports from Ireland were up 17.5% yearon-year in December and, at 19,300t, they accounted for 73% of the monthly total. There were large increases for both fresh and frozen beef from Ireland, rising by 16% and 23%, respectively. Of the other EU suppliers, just Denmark and Germany delivered less beef to the UK than in the final month of 2013.

For a second consecutive month, the UK imported more beef from outside of the EU than 12 months before. Trade with non-EU countries rose by 11% to 2,200t. The countries to show considerable increases included Australia, Uruguay and Botswana. However, Brazil, Namibia and New Zealand all delivered less beef to the UK than in December 2013.

During the calendar year of 2014, the UK imported 254,900t of beef; a 10-year high.


Prices and Supplies

Having fallen back in late January / early February, prime sheep prices at GB price reporting abattoirs rebounded in the middle of February before edging higher again in the final week of the month. At 428p/kg dwt, hoggs were, on average, 1% more expensive than a year earlier in late February.

Carcase quality fell back at the end of January before recovering through February. In the 3 weeks to February 28, 58.5% of hoggs graded at R3L or better, up from 55% in the previous 3 weeks. Nevertheless, this was still a percentage point down on the same period last year.

Prime sheep prices at Scottish auctions showed stability through February, averaging 191-192p/kg lwt. They then picked up at the beginning of March as supplies tightened, reaching 194p/kg lwt. This was a fraction in front of the same week last year.

Hogg prices have generally held up well in recent weeks and months despite sterling rising steadily against the euro. In the second week of March, sterling reached its highest level against the euro since December 2007, with a euro buying 71p. This is likely to be squeezing the profitability of the export trade, forcing exporters to accept lower sterling prices if they want to maintain a competitive euro price. In turn, this is likely to be limiting their ability to pay higher prices to the producer. With the European Central Bank’s asset purchase scheme commencing on March 9, there is likely to be a prolonged period of euro weakness.

With more hoggs carried into the New Year than twelve months before, UK abattoir slaughterings increased by 8.5% to 1.14m head in January. This was the highest January level for six years. A substantial increase of 11% in E&W more than offset tighter supplies in Scotland and NI where throughput fell by 3% and 12%, respectively. Tighter supplies in Scotland and NI may reflect increased gimmer retention rates.

Average carcase weights at the UK level rose 0.4kg (2%) from a year earlier in January to 19.7kg. This was the highest since April 2014. Due to the combination of increased slaughterings and carcase weights, UK prime sheepmeat production rose 11% year-on-year to 22,500t in January. 

Looking at abattoirs north of the border, Scottish Government figures for January show that kill numbers quickly fell behind last year’s levels following a strong opening week. Monthly slaughterings were down 3% on the year at 133,850 head.

However, once significantly heavier carcase weights have been factored in (up 1kg (5%) to 21.2kg), prime sheepmeat production rose 2% year-on-year in Scotland in January.

At Scottish auctions, cull ewe prices steadied from late January to the end of February. However, supplies tightened significantly as March began, pushing up prices to a 7-week high of £79 a head. This was a record for the beginning of March. Compared to the same week last year, the market cleared 41% higher.

UK abattoirs handled nearly a quarter fewer ewes & rams during January than 12 months before. Numbers totalled 139,200 head. On a weekly average basis, the kill was at its lowest level since April 2002. Moreover, for the month of January, it has not been lower since 1988. Low levels of culling have been evident for a number of months, indicating that flock building has been taking place. Higher ewe prices have been the consequence of tight supply.

Due to the substantial decline in ewe & ram throughput, the overall increase in UK sheepmeat production was limited to 3% in January. Prime production accounted for 85.5% of the 26,300t total; an increase of 6 percentage points on January 2014.

Kantar Worldpanel data for the 4 weeks ending January 4 shows that the volume of lamb purchased by GB households edged up as spending fell by just over 1% but retail prices were down by an average of 1.5%. Declines in the volume of chops & steaks and shoulder roasts retailed of a respective 12% and 14% were offset by the combination of an 8.5% increase in leg roasts and 3% more lamb mince being sold. The sharp declines in chops & steaks and shoulder roasts came despite lower prices. By contrast, mince was more expensive and leg roasts averaged the same price as 12 months before.

As February ended, the EU heavy lamb average price was 2% higher than a month earlier, trading at €5.44/kg dwt (398p/kg). This was largely driven by the British market, where prices rose 5% in euro terms. By contrast, Irish prices fell by 1.5% and there were heavier declines of 3% in France, 6% in Spain and 7% in Romania.

Although prices have been sliding of late in much of the EU, the heavy lamb market has remained firmer than a year ago, largely down to tight supplies. The EU average price was nearly 10% above its year earlier level at the end of February. In France, Northern Ireland and the Irish Republic, prices were up by 7-8%. Meanwhile, heavy lambs were priced 13% higher in Spain and GB.

The average light lamb price in the EU showed a further seasonal decline in February, slipping 4% to close the month at €6.22/kg dwt (455p/kg). Greek producers saw prices fall 1.5% but there were 7% declines in Spain and Hungary. By contrast, Italian farmgate prices edged higher.

Despite recent seasonal declines, light lamb prices have held well above year earlier levels, averaging 16% higher. This was mainly down to Spain where tight supplies have pushed prices up by a quarter relative to last year. However, in Italy and Greece, price increases have been more subdued at 1% and 4%, respectively.

UK sheepmeat exports trailed year earlier levels for the fifth time in six months during December. Volumes were down by 11% at 8,900t.

Although overall exports declined, shipments to EU Member States picked up strongly from 12 months before, rising by 16%. Although, France, the main buyer, and Holland purchased less sheepmeat than a year earlier, trade with Germany, Belgium, Italy and Ireland firmed. The smaller markets of Spain, Portugal, Sweden, Austria and Denmark also showed increases. With lamb a traditional centrepiece of New Year meals in Spain and Portugal, their imports from the UK were 4 times and 3 times larger, respectively, in December than in any other month of 2015.

The main driver of the overall decline in UK sheepmeat exports in December was the continued cooling of the Hong Kong market. Whereas volumes had exceeded 1,100t in December 2013, monthly shipments totalled less than 300t a year later. Exports to Ghana were down by a similar degree at 50t. However, the Swiss market took delivery of a higher volume than a year earlier for a third consecutive month; exports jumped 70% to 35t.

During 2014, UK sheepmeat exports decreased by 2% to 102,100t. This was the second highest export volume since the year 2000. As a share of domestic production, exports fell to 34% compared with 36% in 2013. Nevertheless, this was the same share as in 2012. In the final month of 2014, the UK’s sheepmeat imports fell to a 7-year low for the month of December. Shipments totalled 5,900t; down 12% year-on-year. This is likely to reflect increased domestic production and lower exports.

However, in contrast to the overall trend, imports from New Zealand (NZ) increased, rising 6.5% to 4,200t. As a consequence, the share of NZ sheepmeat in total imports increased to 72%; the highest level since May and up 14 percentage points from a year earlier. With Australia coming close to filling its annual quota for the EU in November, its deliveries to the UK were limited to less than 1,000t in December 2014. This compared with nearly 1,600t 12 months before. Imports from the Irish Republic were also sharply lower, falling 37% to 400t.

During 2014, UK sheepmeat imports contracted by 6% to 92,800t. Since 2000, only 2011 and 2012 had seen lower import volumes.


Prices and Supplies

Pig producer prices continued to decline through February due to a well supplied market. However, towards the end of the month, spot prices did pick up from their low point, indicating that the imbalance between supply and demand had narrowed. At 133p/kg dwt in the final week of Febraury, prime pig prices had fallen by nearly 11p/kg (7.5%) since the Christmas week and were down 30p/kg (18%) year-on-year.

Weaner prices have steadied in recent weeks, perhaps in expectation that the market for finished pigs will begin to turn in the coming weeks, given the historic trend of rising prices through the spring and summer. Nevertheless, at the end of February, prices for 30kg weaners remained 21% lower than a year earlier. Meanwhile, the annual discount for 7kg weaners narrowed to 15%.

UK abattoirs proved well supplied with prime pigs in January. At 962,600 head, slaughterings were up 2.5% year-on-year and were at their highest January level since 2002. Kill numbers were up in line with the UK average in E&W and NI, but rose more slowly in Scotland.

Prime pig carcase weights reached a new record high of 82.4kg in January at UK abattoirs. This was an increase of 1.2kg on the year and was fractionally higher than the previous record set in November 2014. Lower feed costs and producer prices than a year earlier gave producers an incentive to take pigs to heavier weights. Adding heavier carcase weights to the higher slaughter numbers meant that UK prime pigmeat production rose nearly 4% year-on-year in January to 79,300t.

The prime pig kill at Scottish abattoirs was almost 1% above its year earlier level in January as throughput totalled 26,900 head.

During the first month of the year, UK abattoirs produced a total pigmeat volume of 82,900t. This was a year-on-year increase of 3.5% as higher prime production was partially offset by a 1.5% decline in sow meat production. Prime pigmeat accounted for almost 96% of total production; up marginally on twelve months before.

In the 4 weeks to January 4, Kantar Worldpanel data for GB household pork consumption volumes showed a year-on-year 1% decline. This was despite retail prices falling by an average of 7.5%. It was lower priced leg and loin roasts that failed to tempt shoppers - sales fell by approximately 10%. However, the volume of pork chops & steaks retailed edged higher as spending fell more slowly than prices. There were also increased sales of shoulder roasts, up 10%, as a 16% decline in the average retail price meant that less money was required to buy a higher volume. Although overall sales disappointed, the commitment to domestically produced pigmeat is evident within the figures. Sales volumes of home produced pork rose by more than 2% in the 12-week period and by 3% in the 4- week period.

The EU average producer price for Grade E pigs rose strongly through February, increasing by 10% to reach €1.43/kg dwt (105p/kg dwt). Although this was a 5-month high, it remained 4.5% lower than a year earlier. When converted into sterling, prices picked up by 7.5% during February but still fell 15% short of year earlier levels.

The largest monthly gains of around 15% accrued to producers in Belgium, Holland and Poland. There were also significant gains of 9-10% in France and Spain and 12.5% in Germany. However, prices lifted more slowly in Denmark, rising 6.5% during February.

While farmgate prices had been running well behind year earlier levels throughout the EU, this has changed for a number of Member States following the recent upturn. Indeed, Polish producers were paid 9% more for their pigs at the end of February 2015 than 12 months before. Meanwhile, German prices were only marginally lower and they were down by less than 2% in Holland. Nevertheless, significant price gaps still remained in France (-9%), Denmark (-12%) and Spain (20%).

Having trailed year earlier levels in 3 out of the past 4 months, UK pigmeat exports finished the year on a high, rising 12% in December to 16,400t. This increase will have been enabled by higher domestic production. However, it had to come at lower prices due to the well supplied European market and rise in the value of sterling. Pork shipments rose 13% to 15,000t while bacon & ham exports increased by 3% to 1,400t. This meant that cured product accounted for approximately 8.5% of total pigmeat exports compared with 9% in the final month of 2013.

Whereas sales of fresh and frozen pork to Denmark and Holland were 15-20% lower than a year earlier in December, UK exporters managed to significantly increase volumes into Ireland, China and Hong Kong. All 3 showed growth rates of around 30-40%. Exports to the UK’s largest market, Germany, also increased; though at a slower pace of 5.5%.

There was a marginal year-on-year increase in UK pigmeat imports during December. Trade totalled 53,900t, up 0.5% year-on-year. Although pork imports rose 3.5%, this was nearly offset by a 3.5% decline in bacon & ham. Pork imports reached a 7-year high for December of 32,500t. Meanwhile, 21,450t of cured product was brought into the UK. This meant that 40% of the total quantity imported was bacon & ham; down 1.5 percentage points when compared to a year earlier. The average value of imports was considerably lower than a year earlier; indeed pork shipments from the EU were 15% cheaper on average.

During December, pork import volumes from Denmark, Belgium and Ireland rose by 10- 15% on a year earlier, while Germany delivered slightly more. By contrast, France, Spain and Holland delivered 10-15% less.

Less bacon & ham arrived in the UK from the three main suppliers in December 2014. On a year-on-year basis, imports from Holland, Denmark and Germany decreased by 3%, 5.5% and 11%, respectively.

Looking at 2014 as a whole, UK pigmeat exports showed an expansion of 5%, reaching 203,400t. Relative to total domestic pigmeat production, this equalled 23.5%; up marginally from 2013.

On the import side, annual volumes increased by 2% to a 3-year high of 614,300t.

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