UK: Red Meat Market - Beef Price Continues At Record Levels

Beef

As the farmgate beef price continues at record levels, the organisation for the English beef and sheep industry (EBLEX) has published its forecasts for 2013 for the UK cattle sector. Supplies available for domestic consumption are forecast to be just under 2% higher in 2013 than in 2012 as a small increase in production and exports is offset by an increase in imports.

Prime cattle slaughterings in the UK were lower in 2012 compared to 2010 and 2011 and EBLEX sees only a small increase in 2013. There was an increase in calf registrations, mainly dairy bull calves at the end of 2011 and the start of 2012, but significantly, for the future of quality beef production, male and female beef calf registrations were down 1% and 2% respectively in 2012. Cow and adult bull slaughterings fell by 1% in 2012, although 2011 was the highest since BSE. Cow slaughterings are forecast to drop by 4.4% in 2013 to 608,000 head due to a younger and fitter herd, although this is still historically high; in 2009 only 497,000 cattle were culled.

EBLEX has forecast UK beef production in 2013 to increase by less than 1% compared to 2012 to 887,000 tonnes. The increase in prime cattle production will be offset by a reduction in cull slaughterings. Exports are forecast to increase by 2% with imports up by 4.5%. There is ongoing demand for cow beef on the continent, but this could be affected by exchange rate fluctuations and the ongoing problems in the eurozone. The increase in imports is mainly due to the expected upturn in production in Ireland. Imports from South America are forecast to remain low as these countries continue to exploit markets outside of Europe.

Sheep

EBLEX also released its 2013 forecast for the sheep sector with meat production forecast to rise 8% this year. Coupled with the high availability of lamb from New Zealand, competition for sales to buyers is likely to be fierce, suggesting bearish pressure on prices. Over recent weeks the sheep trade has picked-up, primarily as a result of the favourable exchange rate (weaker pound).

Production is seen increasing in 2013 but this will mainly be due to the large carryover of unfinished stock from 2012. The terrible weather in 2012 disrupted marketing. More lambs were recorded on farm in the June census but with slaughter numbers down during the second half of the year these extra lambs are expected to come forward during the first half of 2013. If weather patterns return to 'normality', slaughter patterns and carcase weights would return to 'usual' levels meaning production for the year should be higher.

On the back of a good couple of years the UK breeding flock was expected to reach 15m per head but this is unlikely now. The poor weather compounded by higher disease rates, including the Schmallenberg virus, is expected to lead to a lower lambing rate compared to 2012, but due to an increase in breeding numbers the overall lamb crop for 2013 is likely to be similar to 2012.

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