Beef Prices Suffer from Strong Sterling

UK – Changing currency strengths has had a big effect on the price of beef recently, leading to a difficult start to the year in the UK and Ireland, but prices are looking to firm up in the next quarter as supplies decrease.

11 May 2015

3 minute read

Europe

The currency situation, which has seen a 10-15 per cent increase in the value of Sterling, has meant that it has been difficult for processors to export, said Stuart Ashworth, Head of Economics with Quality Meat Scotland (QMS).

At the same time the market has become more attractive for imports.

“Provisional customs data for January and February highlight this challenge by showing exports of UK beef have reduced by around 2500 tonnes (13 per cent) while imports have increased by about 4500 tonnes (11 per cent),” he said.

“Add to that an increase in domestic supply of around 3000 tonnes (2 per cent) during January and February and we find that the market has been working with around eight per cent more beef than a year ago.”

Looking at the latest statistics, Mr Ashworth said that speculation about the impact of Polish beef imports was unfounded.

There is, he added, also no evidence of beef from Poland going into Ireland and then being re-routed into the UK as imports from Ireland.

Responding to recent discussion about the impact of imports on the price which Scottish and UK beef farmers have been receiving for cattle, Mr Ashworth said there was no indication in the trade analysis of any malpractice taking place.

Looking at the tonnages of beef being exported from Ireland to the UK, Mr Ashworth observed that Customs and Excise data relating to beef imports to the UK reveal that imports from Ireland increased by 12 per cent during January and February 2015, compared with last year.

This amounted to some 28,763 tonnes in total (up 3094 tonnes year-on-year) and accounts for some 71 per cent of all UK beef imports.

The Irish Farmers’ Association (IFA) said that beef prices were 79c/kg or €276 per head lower in the Irish markets than the price in their largest export market, the UK.

IFA National Livestock Chairman Henry Burns said the move by some factories to lower quotes is designed to destabilise the trade when numbers are tightening and all they are trying is to get another week’s supply at lower prices.

Mr Burns said the latest AIMS data from April 1st shows the number of cattle aged between 12 and 36 months are down 181,000 head compared to the same period last year.

Mr Burns added that this confirms the volume of finished cattle will tighten rapidly in the weeks ahead and should be back by 120/150,000 head over the next 12 months.

Recognising the difficult start to 2015 which beef finishers have endured, Mr Ashworth said there were a complex range of factors affecting prime cattle prices, many of which are outside producers’ control.

However, the coming months look more encouraging for beef producers as the supply and demand pendulum starts to swing back towards farmers.

“We know the availability of prime cattle in Scotland, UK and Ireland will diminish so, in the next quarter, we expect to see the volume of cattle arriving at abattoirs slow down.

“It is likely we will then see some firmness in the market for the beef producer,” said Mr Ashworth.