MEMBERS UPDATE 28 MARCH 2024 - Scottish Craft Butchers

Easter Holiday – Office Closed

Please note that the office is closed on Friday 29th March and Monday 1st April. As always, the phones lines are diverted to our mobiles should you need to contact the office staff.

QMS Market Update Report

Please find our latest monthly update attached and a summary of key points below:

Beef

1. Prime cattle prices are starting to come under some pressure with availability on farm remaining firm and demand starting to soften seasonally now that procurement for events like Mother's Day and Easter has passed. Although year-on-year increases have slowed towards 2%, leads over five-year averages have held above 25%. Cow prices have continued to show a relatively sluggish seasonal upturn, particularly in Scotland, suggesting a relatively weaker market for manufacturing grade beef.
2. Increased prime cattle numbers on farm at the start of 2024 have been supporting GB slaughter, which has been up significantly year-on-year. However, despite increased numbers on farm, throughput at Scottish abattoirs has continued to trail year-earlier levels, reflecting changes in the supply chain in spring and summer 2023.
3. Despite a significant year-on-year decline in the cow kill at Scottish abattoirs since summer 2023, the beef herd still showed a year-on-year decrease of nearly 2% at the start of 2024, and a further reduction in the cow kill at the start of 2024 appears to have been driven by the dairy herd.
4. In the short-term, a higher spring-2022 calf crop and a slight slowdown in the store cattle outflow from the highs of 2022 should be supporting prime cattle availability in Scotland. However, weekly slaughter does often dip back in April before rebounding in May and then slowing down again in the summer. Numbers could tighten relative to year-earlier levels in the autumn as the reduced 2023 spring calf crop starts dominating slaughter.
5. The combination of a reduced calf crop, lower input costs and firm finished cattle prices have supported store cattle values at the start of 2024, and supply is set to remain tight throughout 2024.

Lamb

1. Hogg prices have risen strongly in the run up to Easter at Scottish marts, passing previous record new season highs and averaging around 50% above 2023 levels and the five-year average in the third week of March. While there has been a slight softening in the final week of the month, prices are still set to average above 360p/kg and the the Eid al-Fitr festival at the end of Ramadan is drawing close.
2. Despite the smaller 2023 lamb crop across GB (-6.3% year-on-year) and smaller carryover of hoggs into 2024, auction and abattoir throughput continued to hold up surprisingly well in early 2024, and this may have limited the expansion of supply to meet the additional demand for Ramadan and Easter. It may also ensure that the market remains tight during the second quarter of the year.
3. GB retail data indicates that lamb sales performance continued to look positive in both value and volume in the 12 weeks to mid-February 2024, supported by an increased share of households buying it, but if rising farmgate prices were to pass through the supply chain, this could test the recent strength of demand.
4. Although UK imports continued to show significant year-on-year increase in January 2024, export volumes remained higher than imports, resulting in a tightening effect on domestic market supply.
5. Figures from Beef + Lamb New Zealand suggest that NZ has a larger lamb crop this year while Australia's sheepmeat production and exports are expected to continue rising in 2024. In addition, shipments to the UK from Australia continue to receive support from increased market access under the terms of the FTA. This could partially offset some of the anticipated market tightening from lower domestic production, but any increase in imports has been easily absorbed by the market in the first quarter.

Pork

1. While the pig market balance may be starting to change, we have yet to see a seasonal upturn in per kilo prices. As a result, prices have slipped marginally behind year-earlier levels for the first time in two years. Nevertheless, its lead over the five-year average remains strong at 35% and a lift in carcase weights has kept carcase value above 2023 levels.
2. The financial crisis of 2021/22 continues to have a lasting effect on prime pig production with GB abattoir throughput continuing to decline on a year earlier in the first two months of 2024. While England's sow herd has started to edge higher again, fattening pig numbers were still down significantly on a year earlier in December 2023, suggesting that any recovery will take time.
3. The recovery does look further along in Scotland, with the number of pigs leaving Scottish farms for slaughter rising significantly in the first two months of 2023. However, Scotland accounts for only around 8% of the GB finishing herd, meaning this will have limited impact on the wider GB market.
4. EU pig prices have rebalanced seasonally higher, narrowing the price gap with GB levels. Rising EU pig prices tend to flow through to higher UK import prices, limiting the potential for downwards pressure on the domestic market. In China, pork prices have cooled since the New Year holiday but herd liquidation in 2023 could see the market tighten later this year, boosting Chinese import demand.
5. With domestic production continuing to contract at the start of 2024, the trade balance provided some offsetting support to domestic market supply. Lower production continued to suppress UK export volumes while imports showed continued though limited growth, likely reflecting the fundamentally tight supply situation in the EU.

Economic conditions

1. Commodity prices have generally been flat at the start of 2024 with little upside impact from geopolitical tensions. Nevertheless, farmers and processors are having to deal with a higher energy cost base and wages continue to rise significantly. More positively for livestock farmers, feed costs have fallen at the start of 2024 as global crop supplies look stronger this year, though a rebound in grain prices in late-March is something to watch.
2. Strong average earnings growth has continued to underpin increased retail sales in cash terms and, with inflation rates beginning to slow in many sectors, this could begin to support sales volumes. Spending has rebalanced towards food stores, with food prices continuing to show above average year-on-year increases.
3. Increased cash spending on beef and pork from a year earlier continued to convert into slightly reduced retail sales volumes in the 12 weeks to February 18 as price rises remained significant in popular product categories like beef mince and pork chops/steaks. However, lamb performed strongly, supported by slightly lower prices, with an increased share of households buying it.
4. Consumer confidence remained close to January's two-year high in March, as nearly a year of wage growth outpacing inflation and lower energy and fuel prices supports some optimism around the outlook for personal finances.
5. PMI surveys suggested that the UK economy continued to grow slowly at the start of 2024, driven by improved demand in the service sector while the manufacturing output slowdown eased further. Meanwhile, unemployment remains close to its record low, ensuring a tight labour market. Though slowing from their peak, wage pressures remained considerable in the November to January period, with average earnings up 5.6% year-on-year.

Product Evaluation Entry Forms (entries close 11th April)

The product competitions for Beef Links, Black Pudding and Home Cured Bacon are open for entry. Entry forms are included with the newsletter. Attached are copies of the entry forms and can be returned to [email protected] .

If you have any questions or queries, please get in touch using the contact details below.

MEMBER SERVICES – Bruce McCall: [email protected] 01738 637472
CRAFT SKILLS SCOTLAND – Claire Simpson: [email protected] 01738 637785

Bruce McCall
Scottish Craft Butchers
8-10 Needless Road
Perth PH2 0JW
Tel: 01738 637472
Mobile: 01738 637472
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