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QMS (Quality Meat Scotland)

13 April 2015

QMS (Quality Meat Scotland) March 2015QMS (Quality Meat Scotland) March 2015

QMS - Quality Meat Scotland


Prices and Supplies

Having shown stability between October and January, deadweight prime cattle prices slipped back through February. A possible reason is that stronger than expected consumer demand over the festive period meant that processors had to re-stock their chills in January, underpinning prices, but then once this process had been completed, weaker seasonal demand placed downwards pressure on producer prices. Indeed, the market has cooled despite numbers trailing year earlier levels at price reporting abattoirs for three consecutive weeks. In the final week of February, deadweight steer and heifer prices averaged 370p/kg. This was around 5p/kg (1.5%) below their October-to January level and 2-2.5% below year earlier levels.

After stabilising at around the 205p/kg lwt mark during February, the average prime cattle price at Scottish auctions fell back to 200p/kg at the beginning of March. Prices have been trading at similar levels to last year in recent weeks.

Prime cattle slaughterings continued to run ahead of year earlier levels in the opening month of 2015. Slaughterings increased by 0.5% year-on-year to 182,300 head. This was driven mainly by Northern Ireland (NI) where throughput exceeded its year earlier level by more than 8%. In Scotland, numbers edged up in line with the average, but they fell by 1.5% in England & Wales (E&W).

A shift from young bulls to steers continued to show up in the January UK slaughter data. Farmers have reacted to heavier pricing penalties for bulls falling out-with target specifications. Consequently, while the young bull kill fell 31% to 15,700 head, the steer kill was up by 9.5% at 93,600 head. Meanwhile, the heifer kill held steady at 73,000 head.

The average carcase weight for prime cattle slaughtered in UK abattoirs reached a 6-month high of 350.5kg in January. Compared to a year earlier, this was up 6kg, or 1.5%. Average carcase weights for steers and heifers rose 5kg while young bulls increased by less than 4kg. The overall 6kg increase was therefore partly down to the shift from lighter young bulls to heavier steers. Heavier carcase weights turned the 0.5% increase in kill into a 2.5% increase in prime beef production; volumes totalled 63,900t.

As noted above, Scottish abattoirs saw prime cattle supplies edge above year earlier levels at the beginning of 2015. The 0.5% increase saw throughput reach 37,200 head in January. A 1.5% increase in the steer kill more than offset a slight decrease in heifer slaughterings and a 3% decline in the young bull kill. Weekly data from the Scottish Government shows that supplies tightened in the second half of the month.

The January data for Scottish abattoirs showed that, at 369kg, the average prime cattle carcase weight was 12kg higher than in January 2014. Although young bulls were only a kilo heavier at 339kg, steers increased by 10kg to 390kg and heifers rose 15kg to 349kg. With carcase weights up more than 3% from a year earlier, Scottish abattoirs produced around 3.5% more prime beef than 12 months before.

Deadweight cull cow prices were relatively steady through January, before jumping higher in early February. This meant that in the final week of February, grade prices were generally 10-15p/kg dwt higher than they had opened the month. The overall average cull cow price closed February at 253p/kg dwt. This was up 14p on the month (6%) and by 4% year-on-year. At Scottish auctions, prices have steadied at an average of 124p/kg lwt in late February/early March following strong seasonal gains. Compared to 2014, prices have been running 5-6% higher since mid-January; though they remain well below 2013 levels.

The mature cattle kill at UK abattoirs exceeded year earlier levels for a second month in January. Slaughterings were up by 3.5% at 62,400 head. However, the average carcase weight for a cull cow was down 3kg on the year (1%). Cow beef production volumes therefore increased at the same 2.5% rate as prime production.

Total UK beef production rose nearly 2.5% year-on-year in January, reaching 84,000t.

In the 4 weeks to January 4, GB households purchased 2.5% more beef than a year earlier. The increase was driven by lower prices as overall spending was only a fraction higher. Breaking down the data into cuts shows that there were increases for roasts (2.5%), stewing beef (1%) and mince (4.5%), but a smaller volume of steak was retailed (-3%). However, households did spend 3% more money buying steaks. By contrast, the volume increases for roasts and mince were assisted by significantly lower prices.

In euro terms, Irish prime cattle prices edged back in the second half of February, but remained marginally ahead of where they had begun the month. Irish R3 steers closed the month at an average of €4.04/kg dwt (295p/kg). However, as the euro weakened significantly during February, sterling terms prices fell to their lowest level in more than 3 months. Currency movements have had a considerable impact on the competitiveness of Irish beef over the past year. Indeed, while Irish producer prices have risen by 6.5% in euro terms, they have fallen by 4.5% in sterling. As February drew to a close, Scottish prices remained 25% above Irish levels.

Most countries on the continent favour young bull production over steers. The average price for an R3 grade young bull in the EU rose 1.5% during February to €3.86/kg dwt (282p/kg). There were above average increases of 6% in Sweden and 2- 3% in Belgium, Poland, Germany and Greece. Meanwhile, in the UK, prices moved with the average, but they were relatively flat in France, Holland, Ireland, Italy and Spain. Whereas Irish prices closed February 2.5% ahead of the EU average, UK prices were 23% above it.

Although the EU average R3 grade young bull traded for 1% more than a year earlier in late February, there was significant variation. In the British Isles, prices traded up 16% in euro terms. Meanwhile, producers in Germany, Poland and Sweden saw gains of 5-7%. However, on the other hand, there were declines of around 5% in France, Italy and Spain.

Seasonal increases saw the EU average O3 grade cull cow price rise 7% during February, taking it to €2.92/kg dwt (213p/kg). This was its highest level since mid-August. The largest increases, of 13% and 16%, respectively, accrued to Dutch and German producers. There were also above average increases in the UK (7.5%) and Poland (9%). However, markets firmed more slowly in France (3%), Spain (3%) and Italy (5.5%). Irish prices were more sluggish, rising 1.5% and the market cooled slightly in Sweden. Whereas steer prices in Scotland averaged 25% above those in Ireland, the differential for cows was much smaller at 8%.

The increase in the EU average cow price during February meant that it closed the month 0.5% ahead of its year earlier level. Once again there was considerable variation amongst countries. Whereas prices were 8-9% lower year-on-year in France and Spain, they were up by a similar degree in Germany, Holland and Poland. Meanwhile, UK and Irish prices were approximately one-fifth higher than they had been at the end of February 2014.

UK beef exports finished the year on a high. December export volumes rose 13% to 10,300t; the seventh time in eight months that shipments exceeded year earlier levels.

At 9,100t in December, beef exports to the EU were up by 4% year-on-year. This was in the main driven by exports to the Irish Republic, which surged by 46% to 4,250t. Other markets showing expansion included Sweden and Denmark. By contrast, exports to Holland, France, Belgium, Italy and Germany were all significantly lower.

December trade figures for non-EU markets showed a considerable year-on-year increase, more than trebling to nearly 1,250t. Exports of frozen beef to Hong Kong accounted for 63% of the non-EU total and were up five-fold from a year earlier at 780t. By contrast, exports to Switzerland were down 9% on the year at 75t.

In the year as a whole, UK beef exports increased by 6.5% to 112,100t. However, this remained well below the levels of 2011 and 2012. Exports to EU countries were up by just over 3% to 104,000t. Meanwhile, trade with non-EU countries grew strongly to reach 8,100t. This was an increase of more than 75%. 13% of UK beef production was exported in 2014, up slightly on the year.

The UK imported 26,300t of beef during December. This was 10.5% higher than in the final month of 2013 and was the highest volume in any month for more than 10 years.

Imports from Ireland were up 17.5% yearon-year in December and, at 19,300t, they accounted for 73% of the monthly total. There were large increases for both fresh and frozen beef from Ireland, rising by 16% and 23%, respectively. Of the other EU suppliers, just Denmark and Germany delivered less beef to the UK than in the final month of 2013.

For a second consecutive month, the UK imported more beef from outside of the EU than 12 months before. Trade with non-EU countries rose by 11% to 2,200t. The countries to show considerable increases included Australia, Uruguay and Botswana. However, Brazil, Namibia and New Zealand all delivered less beef to the UK than in December 2013.

During the calendar year of 2014, the UK imported 254,900t of beef; a 10-year high.

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