With the festive countdown well and truly underway, red meat processors are likely to have almost completed their livestock purchasing to meet the Christmas and New Year trade.
By this time in December, beef for 21 or 28-day maturation will be fully purchased, although there may be a further week of lamb purchasing by processors.
According to the latest analysis by Quality Meat Scotland (QMS), the trade in the run up to the festive period has been no more than steady.
“Deadweight prime cattle prices, despite being 10p/kg higher than last year, have been lower in the run up to Christmas then they were at the end of October,” observed Stuart Ashworth, QMS Head of Economics Services.
“Prime lamb prices similarly are slightly higher than this time last year but lower than they were in late September.”
According to Mr Ashworth, there are a number of influencing factors behind this.
“One influence will be the volume of animals available to processors. In late September and October UK abattoirs were killing fewer lambs per week than last year and carcase weights were lower leading to prices being supported by constrained supply.
“In the run-up to Christmas, marketings have increased and based on the proportion of lambs falling outside the SSQ weight range at auction markets, carcase weights have increased as well although they may be no heavier than this time last year.”
Similarly, prime cattle slaughterings during October were much lower than 12 months earlier and carcase weights were lower. However, during November and December the number of prime cattle reaching abattoirs has increased and is, Mr Ashworth said, currently ahead of this time last year.
However, continuing falls in average carcase weights will have offset growth in animal numbers when the volume of beef produced is considered.
“A further influence is the movement in Sterling:Euro exchange rates. Since October Sterling has strengthened 3.5% reducing the competitiveness of UK meat in the European community market and acting as a drag on farmgate prices,” he said.
“There is often a lift in sheepmeat exports during December and the strengthening of Sterling since mid-November will have played on the competitiveness of UK product.
“In the beef market there is often an increase in imports from Ireland during December in which case again the recent movement in exchange rates will have had an effect on competitiveness.”
A further key influence, Mr Ashworth said, is domestic consumer demand and retail competitiveness.
The feature of the Christmas market is not that people eat more total meat volume (the volume of meat purchased varies little through November to February) but, he said, a change in the mix of what the consumer buys.
“In recent years there has been growth in sales of lamb leg roasts at Christmas and interest in beef roasting joints also increases.
“However, there is a trade off with some of the lower value cuts and in determining a price for the whole carcase processors have to take a view on how the change in the balance of cuts sold affects the revenue for the carcase as a whole,” stated Mr Ashworth.
During November, retail prices for beef cuts were little different from 12 months ago and some of the cheaper cuts have fallen in price. Meanwhile, pork retail prices have been falling but the lower prices have not stimulated growth in sales.
Lamb prices showed the greatest year-on-year increase in November but maintaining the volume of sales has been challenging. Over an extended period, Kantar Worldpanel retail sales data suggest that the total volume of red meat sold over the Christmas period has declined slightly.
“Hence, while Christmas may still have its sparkle, it is the basic building blocks of supply, demand and global competitiveness which shape the red meat trading environment during the festive season,” added Mr Ashworth.