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AHDB Cattle and Sheep Weekly


05 May 2015

EBLEX Cattle and Sheep Weekly - 5 May 2015EBLEX Cattle and Sheep Weekly - 5 May 2015


No let up on falling cattle prices

With the market fundamentals continuing to prove unfavourable for producers and processors still exerting some downwards pressure on the market, deadweight prime cattle prices have fallen again. In week ended 25 April the rate of decline showed no signs of slowing down and the GB all prime average fell by another 3p on the week to 336.3p/kg. The all prime average has now fallen 25p since the turn of the year and is only around 5p/kg ahead of the five-year (2010-2014) average. While the trend is still overwhelmingly downwards, some differing price movements crept into the trade. Steers and heifers meeting R4L specification both came back 4p on the week earlier to 346.8p/kg and 345.0p/kg respectively while young bull prices actually increased. R3 young bulls were a penny dearer at 327.2p/kg.

With Irish prices remaining relatively stable against falling prices in the UK, the price differential with the UK trade has narrowed in recent weeks. In early March it was around 70p/kg, while more recently it is closer to 50p/kg. Despite this, it is still fairly high in a historical context and consequently is likely to be adding to the pressure on the GB/UK cattle trade as the two markets attempt to move closer to each other. However, offering better prospects for the UK trade, Irish supplies are starting to show signs of slowing, meaning that the availability of cheaper Irish product could be on the verge of tightening.

 

The cull cow trade has fared better than the prime trade over recent weeks, with some moderate price strengthening. In the latest week, at 250.3p/kg, the -O4L cow average was up 3p on the week. Despite the euro/ sterling exchange rate making exports less competitive, there continues to be robust demand for cow beef both at home and abroad. However, there is a risk that if prime cattle prices continue to fall, those with poorer confirmation may come close in price to better cows giving rise to the opportunity for some product substitution.

Tight beef supply situation forecast to continue

The latest AHDB forecasts for beef and veal confirm that 2015 will be a year of lower cattle availability and reduced beef and veal production. The effects of reduced calf registrations in late 2012 and 2013 will start to influence the availability of cattle for slaughter later this year. While this is likely to offer some support to the market, as will lower imports, there are still some downside risks to the trade including exchange rate movements, difficulties in the dairy sector and consumer behaviour.

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