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AHDB Cattle and Sheep Weekly

26 May 2015

EBLEX Cattle and Sheep Weekly - 26 May 2015EBLEX Cattle and Sheep Weekly - 26 May 2015

Pressure on price starting to ease?

Despite supply and demand still being very finely balanced, it looks like the pressure on deadweight cattle prices may be starting to show signs of easing. In week ended 16 May the GB all prime average was 324.8p/kg. Representing less than a 3p fall on the week, this marked a slowdown in the rate of decline, being the smallest fall since mid-March. However, it does still mean the average price has edged further below the five -year average for the time of year. Reports suggest that, despite some starting to feel the impact of tightening supplies, processors are continuing to take a cautious approach to procurement. Steers meeting R4L specification came back 3p on the week earlier to 335.5p/kg, while heifers of the same specification were 2p cheaper at 334.5p/kg. R3 young bulls were also back 3p on the week at 313.7p/kg.

The expectation of tightening supplies as the summer approaches is supported by recent data from BCMS which indicates that the number of beef-sired cattle on the ground in the imminent slaughter age range is notably lower than at this time last year. This suggests that the balance in the trade could move into a position that is less out of kilter fairly quickly, particularly as the season is in its transitional period between yarded and grass-fed supplies.

However, with the current fine weather unlikely to stimulate demand for roasting cuts, caution amongst processors could persist in the short term. Coupled with the euro exchange rate and its impact on the competitiveness of imported product, this may well keep a lid on the trade.

Lower production again in April

UK prime cattle slaughterings in April were back almost 3% on the year at 183,600 head. A reduced number of young bulls and heifers forward offset higher steer throughputs. For another month the year-on-year uplift in steer numbers slowed down, giving more evidence that supplies are beginning to tighten. The impact of increased castrations continues to have a bearing on the overall slaughter mix. With young bull throughputs back a quarter on April 2014, their share of the slaughter mix was just 9%. Adult cattle throughputs were up on the year again, being 2% higher at 47,700 head. For another month this is a result of an increase in the number of cows coming forward. Despite this, beef and veal production was back over 2%, on the year at 80,600 tonnes.

Lamb prices fall as numbers increase

After a brief period of stability, lamb prices at GB auction marts have started to come under pressure again. In week ended 20 May the OSL SQQ came back 11p on the previous week, to 167.9p/kg. Throughputs were down almost 15% on the previous week, as expected at this time of year, with fewer old season lambs left on farm and the seasonal switchover occurs. The new season trade has established itself this week and in the latest daily trading, prices have come under growing pressure as significantly increased numbers of spring lambs enter the market. For the week ended 20 May as a whole, the NSL SQQ averaged 194.1p/kg, back 16p on the week earlier. However, on Tuesday 19 May, with throughputs up one third, the SQQ was back 20p on the week to 189.1p/kg. On Wednesday 20 May the week-on-week drop amounted to 26p/kg, as the NSL SQQ came back to 182.2p/kg.

With the anticipation of another large lamb crop, it is possible that the market will remain under some pressure in the medium term. How demand fares amid these higher supplies will be critical to the evolution of farmgate prices. On the export side, the weak euro means that returns in sterling terms will probably be lower. However, imported supplies are likely to have already started to slow down. After heavy drought-induced production around the turn of the year, New Zealand is likely to be getting short of lambs. Its exports to the UK in March, which will have reached the market in April, were down 4% year on year.

Lower lamb slaughterings in April

At 1.06 million head, UK lamb slaughterings in April were 4% down on levels seen a year earlier. This represents the first time since March last year that monthly throughputs have been lower year on year. Somewhat unexpectedly, much of the decline appears to be in England and Wales, although data for Scotland has not been updated by DEFRA. Throughputs in Northern Ireland continued to be well ahead of year earlier levels. For another month it looks like there continues to be little drive to reduce the size of breeding flocks, despite strong prices still being achieved in the market for cull ewes. At 143,200, head adult sheep throughputs were back 10% on the year. However, this may be revised upwards once data for Scotland is confirmed.

For the first time since May last year, the average weight of clean sheep carcases in April was lower year on year, at 20.2kg. Adult carcase weights were also back on the year at 27.6kg. This, together with the fall in both lamb and adult sheep slaughterings, meant that sheep meat production was back 6%, compared with April 2014 at 25,300 tonnes.

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