During February, prime cattle prices continued to set new record high levels at Scottish abattoirs according to the latest market commentary from Quality Meat Scotland (QMS).
Latest figures from the industry body reveal R4L steers reached 489.2p/kg dwt in the week ending February 25th, an increase of 18.5% over the same week last year and of 30% compared to the five-year average.
Iain Macdonald, QMS Market Intelligence Manager, explained: “It is unusual for market prices to be rising at this time of year. Indeed, between 2010 and 2022, R4L steer prices were lower in the eighth week of the year than in the first week of the year on 10 of 13 occasions. In addition, only in 2012 was the price at its highest of the year so far in week eight. Over the 13 previous years, there was an average reduction of 1.5% for the period but this year prices jumped 6% higher.
“In Scotland, prime cattle prices have been rising despite weekly prime cattle slaughter being seasonally firm, running above its 2022 weekly average level, with spring-born cattle from 2021 reaching peak slaughter age.”
The latest cattle population data from BCMS revealed a significant year-on-year reduction in slaughter-age cattle on Scottish farms for January 2023. The combined number of beef-sired cattle and dairy-sired males on Scottish holdings aged 12-29 months was down by 3.3% on a year earlier, driven by an increased outflow of store cattle to England since autumn 2021.
By contrast, at GB level, the BCMS data points to a continuing year-on-year increase in prime cattle availability as 2023 began. Across the 12-29-month age group, numbers were 2.7% higher than at the beginning of 2022, although lighter carcase weights mean that an abattoir aiming to produce the same volume of beef as last year will need to compete for more prime cattle.
Iain continued: “While Scottish abattoirs will currently be drawing from a large group of cattle aged just under two years old, age at slaughter tends to be older and more varied at GB level during the first quarter and last summer’s drought may have slowed finishing periods south of the border.
“Then again, it should be noted that total UK beef production has been rising significantly on a year earlier since October 2022 once an increased cow kill has been factored in. This uplift in cow beef production has not prevented cow prices from reaching record highs, or from cow prices holding much closer to prime cattle prices than usual, with manufacturing grade beef in strong demand.
“Though, in the calendar year of 2022, the volume of beef added to the UK market still fell by 1%, following on from a 2% reduction in 2021, so this rebound in supply in the final quarter is likely to have been insufficient to replenish tight market supplies.”
To add to this, the UK market is facing external price shocks from the EU and global beef market, where a tight balance between supply and demand has been forcing up prices. In the final quarter of 2022, the average price per tonne of UK beef exported was up nearly 22% year-on-year while imports to the UK were priced 10% higher than in late 2021.
As well as prime cattle availability, the BCMS cattle population figures can also provide an indication of changes in the breeding herd. At the beginning of 2023, the number of beef-sired females aged 30 months and over on Scottish farms was 3.3% lower than a year earlier, signalling an acceleration of the year-on-year decline from the 1.6% reduction at the beginning of October 2022.
As well as increased cow slaughter in the second half of the year, there was an 8% year-on-year reduction in beef-sired females aged 24-29 months on farm in Scotland in October 2022, meaning that there were fewer replacements available to add to the herd.
Across England & Wales, the breeding herd was also down significantly on a year earlier in January, with a 2.8% reduction in beef-sired females aged 30 months and over. While declining slightly slower over the past year, the beef herd has reduced at a faster pace in England & Wales than in Scotland over a longer horizon. Indeed, relative to the start of 2018, the number of beef-sired females aged 30 months and over on farm in Scotland was down by 7.9% compared to a fall of 10.7% across England & Wales.
Iain added: “This steeper contraction in the suckler herd in recent years in England & Wales is likely to have been supporting the demand for Scottish-born store cattle, especially given that the beef herd accounted for a much smaller 43% of the total breeding cow herd in England & Wales at the beginning of 2023 compared to almost 73% in Scotland.”
In 2022 the number of cattle aged under 30 months moving from farms in Scotland to farms in England & Wales rose by 35% on 2021 and by 42% above the five-year average. While the pace of increase slowed in the second half of the year, this partly reflected a higher base from autumn 2021 to compare against, and the outflow would still be enough to reduce the prime cattle kill in Scotland by around 2% in the first half of 2023 compared to a scenario of unchanged moves.
Iain concluded: “This helps explain why prime cattle availability in Scotland is set to remain tight in the first half of 2023 despite increased calf registrations in 2021. In 2022, total registrations were only down marginally from 2021 and while this could, in theory, see prime cattle availability begin to level-off in 2024, BCMS data shows that this pool of cattle has already been affected by the increased store cattle outflow last autumn. At the same time, demand for Scottish store cattle from English buyers is reported to have held firm in 2023.
“Looking further ahead, the decline in the breeding herd seen in 2022 is likely to have an impact on calf registrations in spring 2023, with its peak impact on prime cattle availability then occurring in the first quarter of 2025 when these calves reach peak slaughter age at just under two years old. However, a reduced breeding herd across GB means that store cattle availability is set to tighten further in autumn 2023 and spring 2024.”