Increased cattle carcase weights contribute to lift in supply

The increased supply of cattle reaching the market over the past three months has triggered some concern among producers as prices have eased, reflecting the wider beef supply chain market conditions.

However, according to Stuart Ashworth, Head of Economics Services with Quality Meat Scotland (QMS), domestic cattle supplies look set to tighten in the longer term in the wake of lower beef calf registrations in 2012 and 2013.

Across the UK as a whole, abattoirs have handled 1.25% more prime cattle over the first quarter of the year than they did in 2013, and 4% more during March. 

Scotland has also seen an increase in availability, Mr Ashworth observed, with the abattoir kill in March 2.5% higher than 12 months ago. Adding to this increased volume of cattle has been an increase in carcase weights. 

“As the year has progressed carcase weights have increased. In fact during March, UK average carcase weights for steers were at their second highest level this century while heifer weights were the highest seen since before 2000,” he said.

“Inevitably, as carcases get bigger so to do the cuts and joints taken from them.  As the physical size of the retail cuts increase the number of potential buyers diminishes and some seemingly high value cuts have to be used in lower value products or sold away from the premium retail market. The effect of this is to reduce the overall value of the carcase.”  

The combination of increased cattle numbers coming forward and higher carcase weights meant, said Mr Ashworth, that during March UK abattoirs had six percent more meat from prime cattle to sell than last year and Scottish abattoirs four percent more. 

“Cull cow numbers during March were also higher than last year and their weight had also increased resulting in some 13% more cow beef on the UK market, adding to overall supplies. So it is very clear that domestic beef supplies are currently much higher than last year and as a result price comes under pressure,” he added. 

Ireland has also seen producer prices fall over the past quarter and last week, when quoted in Euro, the Irish producer price was trading some 14% lower than the UK price. Twelve months ago the Irish discount was around 10%.  In a similar scenario to the UK, though to a greater extent, Irish abattoirs have handled more cattle than last year, up 13% since the turn of the year.  This increased Irish production has led to some increase in Irish deliveries to the UK adding further to the increased beef availability.

Meanwhile, said Mr Ashworth, consumers are remaining cautious and careful. 

“Over the past quarter the volume of beef bought has declined while the amount spent on beef has increased.  However, the recent news that wages have moved faster than consumer prices over the past 12 months may mean that consumer confidence will improve in the coming months,” he said.

While cattle supplies have increased slightly in the first quarter of 2014, the likelihood is that this situation will begin to turn around, said Mr Ashworth. 

Scottish calf registrations in the second quarter of 2012 – those cattle which will reach slaughter age over the next six months - were five percent lower than the year previous and over the second half of 2012 they were down by three percent.  This decline in calf registrations continued through 2013 when Scottish registrations were down five per cent. 

The situation is slightly different across GB as a whole with calf registrations in 2012 one per cent higher than 2011 but then falling three percent during 2013.  However, all of the increase in GB calf registrations during 2012 was due to increased dairy registrations, beef sired registrations fell two percent.

A similar scenario is shown by the Irish December census which showed an increase of six percent in one to two year old cattle followed by a reduction of almost five percent in the number of cattle under one year old.  The supply of quality beef cattle in the UK and Ireland will inevitably reflect the movement in calf registrations and begin to tighten as the year progresses.