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AHDB Cattle and Sheep Weekly

01 June 2015

EBLEX Cattle and Sheep Weekly - 1 June 2015EBLEX Cattle and Sheep Weekly - 1 June 2015

Welcome stability in the prime cattle trade

Despite the supply/demand balance remaining very narrow, in week ended 23 May the deadweight cattle trade edged up in some areas. At 325.2p/kg the GB all prime average was a fraction up on the week, which brought to an end the consistent trend of falling prices which have dominated the trade so far this year. With slaughterings estimated to be back around 2,200 head on the week earlier, the effect of tightening domestic supplies has just tipped the balance into producers’ favour. In addition to the domestic situation, supplies in Ireland have been starting to show some signs of slowing up in recent weeks. In the latest week, prime cattle supplies at Irish export meat plants stood at around 20,500 head, their lowest weekly level all year and some 15% behind supplies in the same week in 2014.

With steer numbers estimated to be back to the greatest degree, average steer values levelled, while the R4L average increased 2p on the week to, demonstrating better demand for ‘in spec’ cattle. Heifers meeting the target specification came back a penny to 333.9p/kg, while R3 young bulls were 2p dearer on the week at 316.1p/kg. Looking ahead, it remains to be seen whether this latest development will mark the low point in the trade. Indications suggest that the queues for processing ‘scheme’ cattle are dissipating rapidly, which could be seen as a positive indication. However, despite some processors starting to feel the impact of tightening supplies, caution may well still prevail.

The cull cow trade levelled in the latest week, with the overall average little changed on the week earlier at 226.5p/kg. Reports still suggest that there is robust demand for quality cows, with younger animals in particular attracting a price premium.

Beef loses out to chicken and lamb

According to the latest data from Kantar Worldpanel, beef sales in the 12-week period to 26 April were down on the year in both value and volume terms. Consumers have moved away from beef in favour of chicken and lamb, for which promotional activity has been notably higher over the period. Roasting joints in particular struggled and a 7% drop in average retail prices did nothing to stimulate purchases. Volumes were flat, as an increase in the amount purchased per shopping trip was offset by a fall in the frequency of purchases. Beef joints were the most expensive roasting option at Easter. Lamb leg prices were around £2/kg below roasting beef prices, a contributing factor to shoppers switching to lamb legs. Consequently, over the 12-week period there was a sizeable fall in expenditure on roasting joints, compared with the year earlier. Spending on mince fell by more than the drop in volume as a result of lower average prices. Despite being cheaper, consumers bought less mince on each shopping trip, in part due to a sharp fall in volume-driving Y for £X promotions.

Lamb prices continue to decline

New season lamb prices at GB auction markets have continued to fall in the past week, despite the shorter week. In the week ended 27 May the NSL SQQ was back over 9p at 184.7p/kg. However, prices have shown more stability in recent days, with the SQQ on Wednesday 27 May up 3p on the week at 185.2p/kg. This leaves prices almost 56p/kg lower than in the same week in 2014, despite numbers being lower. Throughputs continued to increase as the season progresses, but were only up by 2% on the previous week due to the reduced trading following the Bank Holiday. Expectations of high supplies later in the year are thought to be reducing the effects of current slightly reduced numbers and leading to prices continuing to fall.

Throughputs of old season lambs coming forward are continuing to contract as numbers on farm dry up - marketings in the past week were half those of the previous week. The OSL SQQ fell by over 18p on the week to 149.4p/kg, 51p back year on year.

The deadweight trade has followed the liveweight market and fell in the latest week. The overall NSL SQQ in week ended 23 May was down by 5p on the week earlier to 421.3p/kg. This means prices are now over £1 per kilo lower than those seen around the same time in 2014.


Promotional activity supports lamb sales

According to the latest data from Kantar Worldpanel, in the 12-week period to 26 April purchases of lamb were up, compared to the corresponding period last year. This increase was largely driven by purchases of roasting joints and mince. An increased level of promotional activity meant that the average price paid for lamb was a fraction lower than that for beef and only £2.50/kg more than pork, which encouraged some switching out of both proteins. The increased levels of promotional activity, which helped drive a fall in average prices by just over 5%, resulted in overall expenditure on lamb falling by 4%.

More roasting joints were sold on promotion throughout this period, particularly leg joints, for which market penetration increase by almost 10%. Almost 1 in 5 households purchased this cut in the three-month period. Easter provided some relief for sales of all red meat roasting joints. In the pre-Easter period, fresh roasting joint sales (beef, pork and lamb) were all up compared with Easter 2014. The most popular roasting cut was lamb leg joints which did particularly well in the two-week period on the run-in to Easter. Expenditure on lamb leg joints overtook that on beef roasting joints to be the highest of any red meat roasting joint, approaching £50 million in the four-week run up to Easter. The year-on-year Easter growth, evident since 2011, has again confirmed the position of lamb as an Easter dish.

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