Farmgate beef prices remain strong as supply drops
Low numbers of prime cattle on the market, combined with low carcase weights, have contributed to historically strong farmgate beef prices, according to the latest analysis by Quality Meat Scotland (QMS).
Stuart Ashworth, head of Economics Services with QMS.
The prevailing marketplace is being driven by clear signals over carcase weight and limited outlets for beef from young bulls, said QMS, as “abattoirs have indicated less interest in young bulls over the past year and farmers reacted to the market signal”.
QMS’ head of economic services, Stuart Ashworth, commented: “Historically, the age of prime cattle at slaughter peaks in August and September.
“However, this year the current availability of steers has been reduced as producers have reacted to the call for smaller carcases by selling steers younger and lighter.”
Average steer carcase weights in Scotland during June were 383 kg, 8kg lighter than this time last year, while through June and July, the UK prime beef market has faced up to reduced domestic supply.
“Calf registrations show that in the second half of 2015 Scottish calf registrations were 1% higher than 2014 and these animals will make a significant contribution to the supply over the next six months, however calf registrations in the second half of the year are less than one-third of annual Scottish calf registrations the effect on overall supply is reduced,” observed Ashworth.
However, while the current market is being helped by lower domestic beef production, it is also being supported by sterling’s weakness, which encouraged greater export activity and reduced the competitiveness of imported product.
Ashworth explained: “The latest customs data showed a 3% growth in the volume of beef exports during May with useful growth in shipments outside of the EU, although the EU remains by far our most important export market.
“Across Europe, producer prices are currently around 3%-4% higher than this time last year, while, after adjusting for exchange rate movement, GB producer price is similarly around 3% higher.”
Ireland sent more beef to the UK than last year between February and the end of May, said Ashworth and added: “Nevertheless, overall beef imports have declined and with exports increasing and domestic production falling there has been a basic strength in the market which has supported firm prices for most of this year and is likely to continue to do so in the short term.”
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