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Differential Between NI and ROI Widens

06 February 2014

NORTHERN IRELAND, UK - Analysis of the R3 steer price can be used as an indicator of the overall trade for prime cattle as it is the most common price reported grade in Northern Ireland.

The average R3 steer price in NI last week was 365.3p/kg, 24.3p/kg higher than the corresponding week last year when the average price was 341.0p/kg.

Chart 1 displays the R3 steer price in NI, ROI and GB from the week ending 05 January 2013 up until the week ending 25 January 2014. As indicated in the chart the R3 steer price in GB has consistently been above the price paid in NI with an average differential over the period outlined on the graph of 21p/kg.


Chart 1: Average R3 steer price in NI, ROI and GB Jan 2013 to Jan 2014

There is however some variation across the regions in GB with the differential with NI tending to widen as you move from south to north. Chart 2 displays the average R3 steer price in each of the GB regions, NI and ROI during the week ending 25 January 2014. The differential between NI and Southern England between January 2013 and January 2014 was 12.2p/kg, although this has narrowed significantly in recent weeks and was 1.7p/kg last week. The average differential between R3 steer prices in NI and Scotland between January 2013 and January 2014 was 33.1p/kg. This has also narrowed in recent weeks but not to the same degree and was 27.8p/kg last week.

As indicated in Chart 1 prices in both GB and NI recorded a peak in early summer 2013 before easing back. However with slaughter numbers tight in early autumn 2013 NI and GB prices began to increase approximately six weeks sooner than they normally would be expected to.

The trade for prime cattle started to come under pressure in both GB and NI early October with industry sources citing difficulties in sales and lower than expected consumer demand for beef. The combination of the unseasonably mild autumn, a relatively high retail beef price and competition from other meats will all have impacted on volume beef sales.

While prime cattle prices have generally been declining in GB since October they have come under increased pressure in recent weeks with processors reporting a drop in demand for beef year on year and ample supplies of prime cattle coming forward for slaughter. Meanwhile in NI processors have indicated that supplies of prime cattle are adequate to meet demand despite throughput during the first four weeks of 2014 being 2,893 head lower than the corresponding period in 2013. This represents an eleven per cent decline year on year.

The differential between R3 steer prices in NI and GB has remained broadly similar between January 2013 and January 2014 although the margin narrowed to 12.5p/kg last week. Meanwhile the gap between prices paid in NI and ROI has widened significantly as indicated in Chart 1. During February and March 2013 the R3 steer price in ROI was actually higher than the NI R3 steer price but has been consistently below the NI price ever since with the differential widening as the year progressed.

The R3 steer price (in sterling terms) peaked in early July and has generally decreased since. The differential between NI and ROI last week was 45.8p/kg, the equivalent of £151 on a 330kg carcase. The average R3 price in ROI for the period January 2013 to January 2014 was 346.9p/kg as indicated in Chart 2. This puts the average differential with NI for this period at 23.1p/kg, or £76 on a 330kg carcase.


Chart 2: R3 steer price by region during w/e 25 January 2014

The increased preference for UK Origin Red Tractor Farm Quality Assured beef by the major retailers, and consumers, in GB following the horsemeat crisis early last year has been a key factor in widening the differential between beef prices in NI and ROI. Northern Ireland Farm Quality Assured Beef can be labelled and sold as Red Tractor in GB and can therefore service a much wider market than beef sourced from ROI producers.

Despite beef prices in GB coming under pressure in recent months it still has the highest beef prices in the EU according to the latest EU Deadweight Cattle Prices League Table. In the week ending the 26 January 2014 the average R3 heifer price in GB was the equivalent of 451.9c/kg, 47.1c/kg above the EU average R3 heifer price of 404.9c/kg. NI has retained second place on the table with an R3 heifer price of 442.5c/kg in the week ending the 26 January 2014. Meanwhile with an R3 heifer price of 403.2c/kg ROI was in seventh place on the league table.

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