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AHDB Cattle and Sheep Weekly

18 May 2015

EBLEX Cattle and Sheep Weekly - 18 May 2015EBLEX Cattle and Sheep Weekly - 18 May 2015

Pressure on prices still in place

As the supply and demand imbalance continues, deadweight cattle prices came under further pressure in the week ended 9 May, with a fall of nearly 5p in the GB prime cattle average price to 327.5p/kg. This was a similar fall to the previous week and the average price has now fallen below the five-year average for the time of year. Since the beginning of April prices for prime cattle have fallen by nearly 20p/kg, with some reports suggesting that prices could remain depressed until June. Should any improvement in demand occur, however, the situation could change quite rapidly.

Higher imports despite lower Irish supplies

Imports of beef to the UK were up 1,900 tonnes in March, compared with the same month in 2014, to 23,200 tonnes. Imports from Ireland remained relatively stable at 16,100 tonnes, adding evidence that supplies there are tightening. Imports from other EU member states showed an increase, compared to March 2014. This was due to higher availability since the Russian ban on imports and a favourable exchange rate. As further evidence of the effect of the exchange rate, in euro terms, unit prices increased by approximately €1,200 per tonne, making the UK market very attractive to exporters. Even in sterling terms, unit prices increased by £300 per tonne.

Exports of beef for March stood at 8,100 tonnes, down 6%, compared to March 2014. Exports to Ireland were up by a quarter, although some of this product may have been sent to Ireland for further processing and then re-exported. With the exception of Italy and France, exports to other EU countries were more challenging in March. For example, shipments to the Netherlands and Belgium were down by 42% and 37% respectively. This mixed picture is partly due to a shift from exports of carcases, which make up a high share of exports to the Netherlands and Belgium, to higher-value boneless cuts, which dominate trade with Italy and France. Outside the EU, Hong Kong appears to be becoming increasingly important, with exports more than quadrupling compared with last March.

Lamb prices begin to increase

Lamb prices at GB auction markets continued the moderate increases that began last week. In week ended 13 May, the OSL SQQ increased by more than 2p on the previous week to average 179.1p/kg. Even so, the difference compared to the same week in 2014 increased to nearly 30p. Prices appear to have been stabilising in recent weeks as total lamb numbers have been falling. This has been due to the old season trade coming to an end and with the new season yet to get into full swing. The tightening of old season lamb supplies continued in the week, with numbers marketed up just 6% on the previous week, despite there being an extra trading day. The total number of old season lambs sold at auction was 13% up on 2014 levels but the number included in the SQQ was actually down 6%, suggesting an increase in overweight, out of specification lambs this year.

The new season trade continues to increase, with numbers penned up 87% on the previous week as the market continues to move towards the switchover of seasons. Prices held up well, partly due to the tightening of old season stocks. In week ended 13 May, the NSL SQQ was up by over 3p on the week to average 209.7p/kg. Despite this, the difference compared with 2014 increased to leave the NSL SQQ almost 40p down on the year.

Sharp increase in March sheep meat imports

According to the latest figures from HMRC, imports of sheep meat to the UK continued to increase in March and were up by over a third on levels seen in 2014, at 15,200 tonnes. The largest increase came from New Zealand, with imports up by over 50% to 12,800 tonnes. This is a continuing result of the high slaughterings following the drought in New Zealand and the weak levels of demand for sheep meat shown by China so far in 2015. Some of this increase continues to be offset by lower imports from both Australia and Ireland, down 11% and 47% respectively. In value terms, increased average unit prices led to a 45% increase in the total value of imports, to £72 million.

There is concern that the export data for March again does not show the true picture, with exports reported to be down 23% on the year at 6,500 tonnes, even though Easter was earlier this year. It includes a 15% decrease in exports to France. This conflicts with French data which report a significant rise in imports of sheep meat from the UK in March. Despite the reported fall in exports to France, figures for shipments to the EU as a whole were up by 2% at 6,300 tonnes.

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