International Beef Prices Remain Firm

NORTHERN IRELAND, UK - At the backend of last year, the rising farmgate price of beef on international markets was very topical and it was likely an important driving force behind the increases in the local farmgate beef prices in NI in November and December.
calendar icon 4 March 2011
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The Bulletin covered this issue in mid- November (Issue No. 2142 ) and in the respect that NIprices are to some extent driven by international beef markets, it is worth revisiting trends within these markets to find out how the trade has been performing since then.

Figure 1 shows how international beef prices gathered momentum in 2010 having started to rise sharply in late 2009. Back in January 2010, the NI R3 steer price (which has effectively tracked the EU price throughout the last two years) was significantly ahead of corresponding farmgate prices in the world’s largest cattle producing regions (South America, USA and Australia). However, due to a mixture of currency movements, reduced supplies and rising domestic demand, farmgate prices in countries like Brazil shot up in 2010, relative to EU and NI prices.

Last January, NI R3 steer prices were over €1/kg ahead of corresponding prices in Brazil. At the same time USA prices were €0.90/kg lower than NI levels. However, as 2010 progressed, this gap narrowed as prices in international markets gradually firmed. By mid-November last year, Brazilian R3 steer prices reached 290c/kg, just 7c/kg shy of the NI price in the same week.

Prices in Brazil, USA and Australia remain significantly ahead of 2010 levels. Brazilian R3 prices for the week ending 19 February were 90c/kg higher than in the same week last year. USA R3 steer prices were over 50c/kg higher in mid-February compared to last year. Last week, AHDB reported that South American beef export prices rose in 2010, with tight supplies and increased export demand fuelling the increases in price. The increased export prices are clearly visible in Figure 2 which shows that the Argentinean price has generally been on an upward trajectory over the last two years, pretty much in line with farmgate prices in the South American country. Fuelled by increased demand from the EU for high value cuts and reduced supplies, export prices from Argentina in December 2010 were double the corresponding price from December 2009. Brazilian prices were 34 per cent higher over the same period, while Uruguayan prices were 45 per cent higher.

These trends are reflected to some extent in the FAO food price index which is now at a historic peak. In January world food prices were 3.5 per cent higher than the previous month and 28.5 per cent higher than last January. The meat price index was unchanged from December 2010, but was 15 per cent higher than in January 2010 and the most recent figures show that the upward pressure on world food prices is not abating.

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