Prime Cattle Market Responding to Seasonal Trends

Weekly abattoir throughputs of prime cattle historically peak in October and November and, going into October, this pattern looks set to continue this year, according to the latest Quality Meat Scotland analysis.

During August and September the volume of the weekly UK prime cattle kill has in fact been running slightly higher than last year, observed Stuart Ashworth, QMS Head of Economics Services.

“However, within this total young bull numbers have been lower, while steer and heifer numbers have been running ahead of year-earlier levels.  And looking at trends GB-wide, English and Welsh price-reporting abattoirs have been slightly better supplied than Scottish price-reporting abattoirs,” said Mr Ashworth.

In most years, farmgate prices steady or dip slightly during October and November as the volume picks up, before lifting as Christmas approaches. 

“The latest market reports suggest that this pattern is repeating itself this year with farmgate prices steadying in the past week.  Nevertheless, they are some 2% ahead of this time last year and 17-18% higher than the low point during mid-April,” stated Mr Ashworth.

The clear market signal in relation to carcase weights has resulted in steers in particular being presented to abattoirs at much lighter weights in the past three months with cattle being marketed at a slightly younger age. 

“During August, Scottish abattoirs reported steer carcase weights which were 14kg lower than last year, while across the UK steer weights are 8kg lower than 12 months ago,” he said.

Heifer carcase weights, where heavy carcases are not a problem, are little changed on the year.  Consequently, the increase in the volume of beef leaving UK abattoirs has not increased as much as the increase in cattle numbers.

“Historically, carcase weights fall between August and December.  This is a reflection of the increasing proportion of the animals slaughtered being drawn from spring-born calves born 18 months ago,” Mr Ashworth noted.

“As a consequence, we may find that the size of the fall in carcase weights this autumn moderates in comparison with the fall seen during August.” 

Furthermore, he said, the number of calves registered in Scotland during the first half of 2015 was more than 2% higher than in 2014.

This will offset the small decline in supplies that would have come from the earlier sale, at lighter weights, of cattle that previously would have been sold at the end of the grazing period at 26 to 30 months of age. 

These two factors may result in the volume of beef leaving UK abattoirs increasing compared to last year. To sustain prices, said Mr Ashworth, firm demand will be required and domestic demand for prime beef is reported by Kantar Worldpanel to be good. 

“Estimates of sales in the 12 weeks to mid-August show the volume of beef sold in retail outlets increased by 2%. 

“However, this growth has come from aggressive retail pricing as it is estimated that consumers spent less than last year to buy this higher volume of beef.  There may also have been some switching to cheaper cuts which adds to the abattoirs’ challenge of achieving carcase balance in what they sell.”

Weak sterling has contributed significantly to a change in the balance of trade in beef, said Mr Ashworth. 

“Official trade data has a time lag with latest information only available to the end of July. Nevertheless the July trade figures show modest growth in exports but a substantial reduction in imports. “This change resulted in a reduced volume of beef on the domestic market and helped, along with multiple retailers commitment to British product, to support average farmgate prices. Overall, though, the current beef market remains finely balanced.”