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QMS (Quality Meat Scotland)


30 January 2014

QMS (Quality Meat Scotland) - January 2014QMS (Quality Meat Scotland) - January 2014


QMS - Quality Meat Scotland

Prices and Supplies

Deadweight prime cattle prices have been on a downwards trend since late November. Since reaching 418p/kg dwt in the week ended November 23rd, steers have fallen for 8 consecutive weeks, and during the week to January 18th they traded below £4 a kilo for the first time in nine months. Nevertheless, at 396.5p/kg dwt, steers were still 6% more expensive than in the same week last year. Numbers at price reporting abattoirs have been at their highest levels since last spring but remain lower than in January 2013.



During 2013, the average price paid by Scottish abattoirs for steers was 403p/kg dwt. This was 47p higher than in the previous year; a gain to the producer of 13%. On average, Scottish abattoirs paid around 5% more for prime cattle in 2013 than their counterparts in England and Wales.

After a brief spike around Christmas due to thin trading volumes, prime cattle prices have fallen back sharply at Scottish auctions in January as supplies have normalised. Weekly numbers either side of the festive period have been their highest since May, suggesting that better supplies have placed some downwards pressure on prices. The prime cattle average slipped to 209p/kg lwt in the week to January 22nd. Although this was an 11-month low, it was 4% higher than in the same week last year. By contrast, south of the border, prices have been trading 5-6% below January 2013 levels.

At Scottish auctions, the annual average prime cattle beast sold for nearly 223p/kg lwt in 2013. This was an increase of almost 12% on the previous year.

In the final month of 2013, UK abattoirs slaughtered 1% fewer prime cattle than a year earlier. Throughput totalled 138,300 head compared with 139,800 12 months before. This means that eleven of the twelve months in 2013 showed year-on-year declines and the annual prime cattle kill subsequently fell 2% to 1.93m head; the lowest in more than 40 years. However, the average carcase weight lifted for a second month and reached a 6-month high of 340kg. Nevertheless, this was still 2kg lighter on the year. In the year as a whole, the average prime cattle carcase weighed 340.5kg compared with 347kg in 2012 and was at its lightest since 2008.

Although slaughter data showed an increased heifer kill compared to a year earlier for a ninth consecutive month, the rise was only marginal in December. However, growth in young bull slaughter volumes accelerated in December to a 2013 high of 11%. By contrast, steers remained tightly supplied with numbers falling by 5% on the year. Annually, the number of heifers slaughtered increased by 1% over 2012 to 722,600 head, while the young bull kill expanded by nearly 3.5% to 292,800 head. But, with steers in short supply throughout 2013, their annual kill was down 5.5% at 914,000 head.

At Scottish abattoirs, prime cattle supplies were relatively tighter than in the UK as a whole in December as volumes were down by 5.5% on the year. Abattoirs handled 29,600 prime cattle; 1,650 fewer than a year earlier. The heifer kill was lower on the year for the second time in three months, falling by 1.5%, while the shortage of steers intensified with numbers down by 10%. However, young bull availability was 8% better than a year before.

There was significant volatility in deadweight cow prices over the mid- December to mid-January period due to the thin trading volumes around Christmas and New Year. Prices initially increased sharply as volumes declined before easing back as more normal levels of cows reached the market into January. By the week ended January 18th prices had stabilised with price reporting Scottish abattoirs paying around 237p/kg dwt for a second week to secure cows. While slightly above the levels of November and early December, compared to early January 2013 it was around 12% lower. Sales through the ring showed similar price and volume trends, rising as numbers dried up over Christmas, before falling back in January. Cows traded at 108p/kg lwt in the week ended January 22; similar to November and December, but down 11% year-on-year.

December was the eighth month in succession to show lower throughput of mature cows and bulls than a year earlier at UK abattoirs. The decline narrowed from around 14% in October and November but was still more than 11%. Annual kill data showed that mature cattle slaughterings fell by more than 5% to 608,000 head. This was the second consecutive year of decline.

Scottish slaughter data for December showed a much steeper decline with the number of mature cattle falling by more than 20% year-on-year. Such a sharp drop may well reflect a more normal level of culling following the very high figure in December 2012 which was influenced by the high cost and poor availability of feed.

With supplies of prime and mature cattle continuing to prove tight, total UK beef production was down by 4% on the year in December, matching the rate of decline in the calendar year. Monthly beef production volumes of 60,600t were the second lowest of the year after August. The 4% decline in annual beef production meant that output, at 847,700t, was at its lowest level since 2006; the year that cow beef began returning to the market.

Kantar Worldpanel data for the 12 weeks to December 8th showed that GB households spent 2.5% more on beef than a year earlier. However, with the average price going up by around 9.5%, this increased spend secured 6.5% less beef. There were declines in sales volumes for all product types with mince faring best, declining by less than 3%. At the high end of the retail offering, steak sales were down by more than 6% and there was an even larger decline of 13% for premium roasting joints. In terms of manufactured products, burger sales fell 7% on the year while chilled and frozen ready meals fell by 8% and 16% respectively.

While Irish steer prices have risen by 1% on the month in euro terms they have become slightly cheaper when quoted in sterling as the pound has strengthened following positive developments in the UK unemployment rate. However, UK producer prices have fallen slightly more than those in Ireland over the past month. Most countries on the continent favour young bull production over steers. In mid-January, young bull prices were, on average, unchanged from the week prior to Christmas. However, Italian prices fell by 5% and there were slight declines in Denmark and Belgium. Producers in Spain and Germany fared better with prices rising by 1%, while Polish prices lifted by 3%.

Cull cow prices fell sharply across Europe in the second half of 2013. However, over the past month there has been some slight improvement for producers with the average O3 graded cow rising in price by 2%. Holland was the main exception as prices slipped back 2% while prices have flat-lined in Belgium. Prices have moved slower than average in France and Spain and in-line with the average 2% increase in Italy and Ireland. Producers in Poland and Germany have received above average gains of 3% while they have risen by 5% in the UK.

November was the ninth consecutive month that UK beef exports trailed year earlier levels. Overseas sales fell by 23% from the same month last year to 9,950t; the same rate of decline as in October. Contributing factors to the decrease are likely to have included strong competition for tight supplies of home product in the domestic market and sluggish overseas demand for UK manufacturing beef which faced strong competition from cheaper suppliers. Exports accounted for 14% of total UK beef production in November 2013, down from more than 17% a year earlier.



For a second month, the UK’s largest beef markets, Holland and Ireland, bought 20% and 35% less respectively than a year earlier, while volumes sold to Germany fell slightly and there were significant declines into the smaller markets of Denmark and Poland. However, Italy, France, Spain and Sweden did all increase imports from the UK. Exports to non-EU countries were again well down on the year with a 44% decline to 380t. Sales to Ghana and Switzerland halved while trade with Norway dried up. However, exports to Hong Kong rose by nearly a third.

For the fifth time in six months the UK imported more beef than a year earlier during November. Shipments totalled 21,900t; an increase of 7%. The overall increase was mainly driven by a 20% rise in imports of frozen beef; though fresh beef also increased by 3%. In turn, the overall increase can be linked to Ireland, the largest supplier of beef to the UK. While it delivered slightly less fresh beef (12,000t), imports of frozen product jumped by 60% on the year to 3,100t.

Of the other EU suppliers, more beef came to the UK from only Germany and France. The increase from Germany was for frozen beef while for France it was fresh beef that increased. By contrast, there were declines of around 10% in shipments from Holland, Poland, Belgium and Denmark; and 30-40% from Spain and Italy. These declines were largely down to reduced volumes of frozen beef. Indeed, of these six countries, only Holland and Denmark saw declines in fresh beef sales.

Imports from further afield tended to increase on the year in November. New Zealand, Brazil, Argentina, Botswana and Namibia all saw significant increases while imports from Australia were marginally higher. Uruguay was the main exception with deliveries down by 60% to less than 200t.

News Round Up

In the Irish Republic, an additional 60,500 prime cattle were slaughtered in 2013 compared to the previous year. This was a 6% growth rate. However, in the final quarter of the year, throughput growth slowed substantially to just 0.2%, and during

December, slaughterings were 0.5% behind their year earlier level. Moving into 2014, export abattoirs killed 44,200 prime cattle in the first two weeks of January compared with 40,400 in the first half of January 2013, indicating that supplies have improved again.

West Country Beef has been granted protected status with the PGI label. The label applies to beef from animals born, reared and finished on a forage-based diet in the six counties that make up the South West of England: Cornwall; Devon; Dorset; Gloucestershire; Somerset; and Wiltshire. To qualify for the PGI label the cattle must be slaughtered at an approved abattoir; but this does not have to be in the South West. Carcasses qualifying for the brand must be graded at O+ or better with a fat score of between 2 and 4H. The product can be marketed as a whole carcase, a whole side, hindquarter/forequarter or primal cuts. At farm level, the producer must have kept a feed diary to ensure that at least 70% of the diet was forage-based, while the rearing must have taken place on an extensive system with at least six months of grazing. Regional census data from 2010 placed the total cattle herd in South West England at 1.8m head; very similar to Scotland.

The World Organisation for Animal Health (OIE) has reported a positive test for BSE in Germany. A 125-month old cow from a farm near the border with Poland showed no clinical symptoms pre-slaughter and was found to have a rare form of the disease not thought to be linked to feed consumption. As a consequence, the cow’s two remaining offspring still on the farm were destroyed while a further five cattle that were born on the farm one year either side of the infected cow’s birth were also destroyed. Prior to the positive test the affected farm kept a total of 80 cattle.

The Swedish Board of Agriculture has estimated that domestic beef consumption grew by 3.5% in 2013 to an average level of 26.4kg per person. This was an increase of around 900g and more than reversed the 700g decline in 2012. Over the past decade, beef consumption has fluctuated around 25kg to 26kg per person with a marginal upwards trend. In recent years consumption has been shifting away from manufactured products such as meat balls and burgers towards marbled steaks. Swedish consumers tend to show a high level of interest in products with known provenance and sustainable methods of production.

At the current time just 22 of the 56 Brazilian abattoirs that the Russian authorities have cleared to deliver beef have full approval with the remainder undergoing temporary restrictions. While some of these plants will not be permitted to export to Russia, others will still be able to trade but face additional monitoring. This highlights the difficulties of selling meat to Russia.

Following significant concerns for animal welfare relating to the treatment of cattle exported from Australia to Indonesia for slaughter, considerable efforts have been made in the past couple of years to improve standards in Indonesian abattoirs. Slaughter plants must now meet animal welfare standards before importing cattle from Australia and, following recent investments, it is expected that Indonesia will buy more than 700,000 Australian cattle in 2014 compared with last year’s 400,000. Indonesian authorities are targeting such an increase in deliveries in order to place downwards pressure on domestic beef retail prices. With the cost of living a significant political issue in the country, the Indonesian government is to adjust the volume of beef and live cattle imports in an attempt at achieving a specific level of beef retail prices. While most cattle trade between Australia and Indonesia is in live form due to the lack of fridges in most Indonesian homes, 39,400t of beef was delivered in 2013. More than half of this total was destined for further processing.

January 2014

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