The number of cattle reaching slaughter stage looks set to tighten as 2014 progresses, easing the prevailing pressure on farmgate prices, according to the latest analysis by Quality Meat Scotland (QMS).
In the short-term, however, the market is well supplied as a result of an increase by almost 60,000 head in the number of 24 to 30 month old cattle on GB farms.
“Just under half of these additional cattle are female and some will be destined for the breeding herd, particularly dairy herd expansion. Nevertheless, there is a short term availability of cattle still weighing on farmgate prices,” observed Stuart Ashworth, QMS Head of Economics Services.
One of the advantages of having a livestock traceability system, Mr Ashworth pointed out, is that it holds a lot of information on cattle numbers which can help to shine a light on future cattle supplies. This gives a helpful indication of the supply side of the supply and demand equation that drives market prices.
Latest updates on calf registrations reveal that over the first quarter of 2014 Scottish calf registrations were 6.5% lower than last year and across GB as a whole calf registrations are down 2.8%.
“To re-coup the Scottish decline of the first quarter would require calf registrations during April and May to increase by over 4%. Despite quite a number of cows calving later than usual as a result of being slow to settle in calf last summer, this would seem unlikely,” said Mr Ashworth.
One welcome indication from the data, he said, is that calf mortality has been much lower than last year and this will off-set some of the reduction in calf registrations.
“The legacy of 2013 is not only seen in calf registrations this spring but also in the population of cattle under 18 months old on British farms,” Mr Ashworth added.
“Across GB as a whole the number of cattle under eighteen months old on farms was 3% lower at the beginning of April than last year. There is also a small decline in cattle aged between 18 and 24 months on GB holdings this April. This points quite clearly to a tightening in the number of cattle reaching the slaughter stage as the year progresses.”
For the moment, however, increasing carcase weights are further adding to the volume of domestically produced beef on the home market.
“This also helps to explain why farmgate cattle prices are still under pressure, as does the latest information from market research company Kantar,” said Mr Ashworth.
Kantar stats show that retail demand for fresh beef has fallen by almost 4% compared to last year although consumers have spent some 3% more on buying less fresh beef.
Perhaps not surprisingly one year on from the horsemeat saga, ready meals and processed beef sales have increased on the year. These products, however, will often use lower value beef than that sold in the premium fresh market.
“The past quarter has also been tough for meat exporters,” observed Mr Ashworth. “While exports are still a significant part of the beef market, deliveries are running well below last year’s levels.
“A small increase in beef imports and the various other small factors have collectively had an impact and resulted in the UK home market being well supplied over the past quarter leading to price pressure.” In the short term, therefore, the UK beef market looks well supplied.
“However, cattle numbers look set to tighten as the year progresses and more favourable general economic data is pointing towards improving consumer confidence,” said Mr Ashworth. “Accordingly, the supply and demand pendulum is likely to swing in favour of the supply side of the equation as the year progresses.”