QMS Market Report – August 2008

Cattle Prices and Supplies

UK prime kill which had been 6% down in May deteriorated further to a 10% decline in June and July. Furthermore, while prime kill has fallen so have carcase weights, further exaggerating the decline in beef production. However, in June an increase in cow availability and increased imports steadied prime price but as July progressed cow slaughterings fell back to year earlier levels and the total market tightened up again.

Scottish prime cattle throughput declined 13% year on year during July. A combination of factors is at play here including temporary closure of an abattoir and fewer cattle imported from England and Wales as bluetongue movement controls were expanded.

Across the UK as a whole heifer slaughterings in the past three months have fallen 5% compared to the overall prime kill decline of 8%. However in Scotland, over the past three months the heifer kill has fallen more than 13% below year earlier levels, in line with the overall decline in prime kill, but significantly greater than the 5% decline in the previous quarter. Indeed during July alone, the Scottish heifer kill fell 17% compared to the overall prime kill decline of 13%. Is this an early sign of a stabilisation in the size of the Scottish beef herd?

Prices have also come off their peak in Ireland and across Europe as a whole, although France and Germany are showing stability rather than decline. Nevertheless, in general terms the average EU price for prime cattle is 11% higher than a year ago. The UK and Ireland lead the way with price improvements (in Euro) of more than 13%. In contrast France has lagged behind with year on year improvement of less than 5%.

As cattle supplies tightened during June, UK beef exports slipped back below year earlier levels. During June, UK deliveries to France, Germany, Greece and Spain all declined. However, some growth was achieved in sales to Italy, Ireland and Belgium.

Imports however have continued to grow. With Argentina and Brazil effectively out of the market the big beneficiaries have been Ireland, despite their own reduced supplies, Uruguay and Australia.

News Round Up
Imports of beef into the EU with full tariff paid have fallen considerably over the past twelve months. Problems with deliveries from Argentina and Brazil explain most of the 40% decline to 94,000 tonnes.

Wholesale beef prices across Europe have risen considerable over the past eighteen months as supplies begin to tighten due to a combination of trade restrictions and smaller EU cattle herd. The price for forequarter beef which usually fluctuates seasonally, low in summer and high in winter, has behaved “normally” in France and Italy but the price is still some 15-20% more than last year. German prices have shown no seasonal behaviour this year and are some 30% higher than a year ago. In Germany, previously big users of Argentinean and Brazilian beef prices for hind quarter cuts lifted 30% over the year. In France and Italy hindquarter wholesale prices have increased a more modest 10% in twelve months.

The number of Brazilian farms licensed to export to the EU has increased slowly over the past six months to currently stand at 232.

Attachments:

• MARKET REPORT August 2008 swa.pdf