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AHDB Cattle and Sheep Weekly

24 April 2015

EBLEX Cattle and Sheep Weekly - 24 April 2015EBLEX Cattle and Sheep Weekly - 24 April 2015

Pressure on the prime trade continues

The combination of slow consumer demand and ample supplies of both domestic and imported beef continues to drive some restraint amongst processors and exert downwards pressure on the prime cattle market. Reports still suggest that cattle at the premium end of the market are proving hard to place, compared with the more commercial types. Consequently, in week ended 18 April, as prices for all classes of cattle fell, the deadweight GB all prime cattle price was back another 3p on the week at 339.5p/kg. R4L steers were down 2p on the week to 350.8p/kg, while heifers of the same specification fell 3p to under 350p/kg for the first time since late August last year. Young bull prices came under even more pressure. At 325.9p/kg the R3 average was back over 5p on the week earlier.

With this in mind, there is a risk that some animals at slaughter condition could end up being kept on farm longer than would be ideal, continuing to give rise to concerns that the trade is following the same evolution as last year. However, while demand may be no better, perhaps even worse this year, the expectation that there will be fewer cattle around on both sides of the Irish Sea could offer some support to the market in the medium term. Nevertheless, competition in the retail environment and the euro exchange rate could act as a lid on any notable upwards pressure.

The cull cow trade continues to fare better than the prime cattle trade with some moderate price stability. In the latest week, at 247.4p/kg the -O4L cow average was unchanged on the week as reports suggest that the supply/demand balance is just in producers’ favour, particularly for those animals with a better level of finish.

Higher price cuts take a greater share of the export mix

According to latest data from HMRC, beef and veal exports in February are recorded as being 20% back on the year at 7,900 tonnes. The decline was largely on the back of a drop off in trade to the Netherlands as shipments to Ireland and France were both higher. Despite the decline in volume, the continued shift away from fresh/chilled carcase shipments to higherpriced cuts was again evident. Boneless fresh/chilled shipments increased almost 30% on the year to account for two thirds of all the UK’s fresh/chilled trade. In February last year they made up under 40% of exports. With this product trading at around £4,000 per tonne, as opposed to £1,700 for fresh/chilled carcasses, it is clear how important this development is in continuing to deliver additional returns to the sector.

Imports were again above year-earlier levels. At 20,000 tonnes, volumes were up 14% on the year. There was a notable increase in product from Ireland; which remained competitively priced as sterling remained strong against the euro.


Liveweight lamb prices fall

Prices for old season lambs at GB auction markets have continued to fall as numbers coming forward remain high, compared to demand. In week ended 22 April throughputs were down 15% on the previous week, as expected at this time of year as fewer old season lambs are left on farm. In addition, the previous week’s throughputs were higher than normal as it was the first full week of trading following the Easter Holidays. The OSL SQQ was down 12p on the previous week at 184.5/kg. This is almost 30p/kg lower than in the same week last year, when supplies were much tighter as it was a shorter week as a result of the later Easter holiday period. Since starting to appear on the market, new season lamb prices have broadly been tracking at similar levels to last year. However, in the latest week they fell sharply on the back of increased numbers coming forward - throughputs were up 20% on the week earlier. The NSL SQQ was back 21p/kg on the week to 221.3p/kg. At this price, they are trading well below the same time last year but again comparison is difficult as a result of the timings of the Easter holidays.

In contrast, deadweight prices have been more stable in recent weeks. In week ended 18 April the OSL DW SQQ was up 2p on the week at 445.4p/kg. This modest uplift could be attributed to some restocking by processors following the Easter period.

Imports from New Zealand higher

According to the latest HMRC data, sheep meat imports in February increased 8% on the year to almost 8,000 tonnes. This appears to be more reflective of what is being seen on the market, with much of the increase being driven by higher shipments from New Zealand. Drought has led to producers in New Zealand finishing animals earlier, increasing levels of production, which has resulted in significantly higher volumes available for export. This large increase in imports from New Zealand was marginally offset by lower imports from Australia and Ireland, down 1% and 39% respectively.

The February data again looks like it does not indicate the true picture for the export trade, particularly that outside the EU. Overall sheep meat exports are reported to have fallen 12% year on year to 6,050 tonnes. Despite total exports appearing to fall, shipments to the EU are reported to have increased 5% on the corresponding month last year, driven by increased shipments to the UK’s largest market France, and further increases to Ireland. With the current strength of sterling against the euro this can be viewed as a very positive result.

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