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Market Review

by Dr Phil Hadley, EBLEX SW

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In the first quarter of 2010, UK prime cattle slaughterings totalled 507,300 head, 1% higher than in the corresponding three month period a year earlier. Young bull slaughterings experienced the largest year-on-year increase, up 27%. Steer slaughterings increased 3% on the year, in contrast with heifers which were down 8%. The increase in the young bull slaughterings is due to more male dairy calves kept for rearing as a result of the lack of a live export trade for these animals. However, the higher slaughterings and relatively subdued demand and higher imports has put pressure on prime cattle prices leading to the recent decline.

Higher slaughterings and an increase in average carcase weights has meant UK beef and veal production has increased to 219,000 tonnes in the first quarter of 2010, nearly 5% more than in the corresponding period in 2009. Exports of fresh and frozen beef in January 2010 decreased year on year by 7% to 7,300 tonnes. Exports to Ireland fell by 20% compared with January 2009 to 2,200 tonnes. However, trade with the Netherlands strengthened with shipments increasing 9% to 3,000 tonnes and accounting for 38% of all UK exports.

UK imports of chilled and frozen beef in January 2010 at 17,500 tonnes were 1% higher than in the same period a year ago. Imports from Ireland increased by 3% to almost 11,500 tonnes, accounting for almost two thirds of UK imports during the month and consolidating Ireland’s position as the leading supplier of beef onto the UK market.

Outlook

The 2009 December Agricultural Survey found a 2% decline in the dairy herd due to continued lack of sufficient milk price optimism and underlying issues over succession and labour. The UK dairy herd is forecast to decline a further 1.5% in 2010 and a similar fall in 2011. In contrast the beef herd experienced little change with reports that improving store cattle values have helped stabilise the downward trend in the national herd. Another factor, but to a lesser extent, is the move of some producers out of dairy production into keeping a suckler herd. With the fundamentals of the current market situation projected to be maintained in to 2011, it is expected that there will be little change in the suckler herd to the end of next year.

There is no significant domestic growth anticipated for beef in 2010 and this will lead to little change in imports. Foreign Government and EU restrictions as well as supply issues mean trade from South America will remain limited. Despite some recent strengthening of sterling against the euro, the pound is expected to continue to be relatively weak in 2010 and coupled with increased export marketing activity export, volumes are forecast to remain firm in 2010.

With little recovery in the economy projected in 2010 and modest growth in 2011 coupled with the relative price of beef versus other proteins, overall consumption is forecast to see only slight growth year-on-year for the next two years.

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