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AHDB Cattle and Sheep Weekly

11 May 2015

EBLEX Cattle and Sheep Weekly - 11 May 2015EBLEX Cattle and Sheep Weekly - 11 May 2015

Continued pressure in the trade

In week ended 4 May with the supply/demand balance continuing to be unfavourable for producers, the sustained pressure on the deadweight cattle trade continued. For another week the rate of decline showed no signs of slowing down. Prices for all types of prime cattle were back on the week and consequently, the overall GB prime cattle average price was back by another 4p to average 332.0p/kg. The all prime average has now fallen 15p over the past four weeks.

Unsurprisingly, concerns about the evolution of prime cattle prices is continuing. With the all prime average just 7p/kg ahead of the low point in the summer last year comparisons are unavoidable with that period when the supply/demand balance was also very unfavourable for producers. However, in contrast to last year, supplies in the UK and Ireland will both start to tighten up as the year progresses, which in the broad picture does offers some support to the market. However, there continues to be a downside risk, particularly for the shorter term, due to some of the challenges in the highly competitive retail environment and the strength of sterling against the euro.

The cull cow trade has recently been fairly robust, with reports consistently suggesting that there is strong demand for well fleshed cows. This is likely being helped by an increased requirement for manufacturing beef amidst the finer weather of late. However, in week ended 2 May the average –O4L cow price came back 2p on the week earlier to 247.9p/kg, despite fewer cows coming forward. The strengthening pound and competition from poorer quality clean cattle could be presenting some risk to the trade.

Lower prices support roasting joint sales

According to the latest data from Kantar Worldpanel, in the 12-week period to 29 March, beef sales recorded growth in both value and volume terms, compared to the corresponding period a year earlier. Consumers again demonstrated some switching into the beef category, away from fresh pork and frozen chicken.

Sales of roasting joints in particular were notably higher than last year. While this would have been partially influenced by the earlier Easter holiday this year, it was also aided by lower prices. Average prices were almost 10% down year on year, with two of the Big 4 supermarkets in particular offering significant temporary price reductions over the period. However, this mitigated the overall expenditure increase on roasting joints to some extent. Sales of stewing and frying/grilling cuts both recorded higher growth in value than volume, with prices generally higher than a year ago.

Lamb prices stabilise following falls

Following a sustained period of decline, old season lamb prices at GB auction markets appear to have stabilised somewhat in the latest week. In week ended 6 May the OSL SQQ increased a penny on the week earlier to average 176.86p/kg. Despite this, it still meant prices were around 25p below levels seen in the corresponding week last year. However, this is a smaller difference than in some of the previous few weeks. This stability in the trade could be down to a tightening of supplies due to the shorter week following the bank holiday. This resulted in the numbers of old season lambs marketed in the week being down 23% on the previous week. To some extent this would be expected anyhow with throughputs starting to tail off as we head towards the seasonal switchover.

The number of new season lambs coming forward continues to increase as the season gets up and running. Following the sharp falls of recent weeks, the price of new season lambs held up relatively well. In week ended 6 May the NSL SQQ was back less than a penny to average 206.48p/kg, although recent daily averages have actually shown a marginal increases. Despite this relative stability, this leaves the NSL SQQ down by almost 35p, compared to the same period in 2014.

Following the sharp falls in the liveweight market in previous weeks deadweight lamb prices took a heavy hit in week ended 2 May. The OSL SQQ was back 30p on the previous week at 378.1p/kg while the NSL SQQ came back over 50p to average 441.8p/kg.

Lamb performs well at Easter

With Easter falling earlier this year than last year it came as no surprise that data from Kantar Worldpanel indicated that lamb performed well in the three months to 29 March. A double digit increase in sales volumes filtered through to a 2% increase in overall spending. This reflected both the greater availability of product on the shelf and the prevalence of promotions by the major retailers. In addition, switching from fresh pork was also a factor in more shoppers buying lamb.

Lamb chops and steaks were the only cut to have underperformed year on year, in both volume and value terms. Only one of the Big 4 retailers was able to maintain its volume sales, while the other three all recorded a drop in sales. In contrast, this cut did well at the hard discounters, aided by lower average prices than the same three month period a year ago.

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