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Record UK Beef Prices Result Of Global Phenomenon

21 September 2011

UK - Beef farmers worried that the recent unprecedented surge in prime cattle prices could burst, like a bubble, should take comfort from the fact the market is being led by a world-wide lift in demand coupled with unusually tight global supplies.

This is the view of the National Beef Association (NBA), which says it is no surprise that many breeders and finishers, faced with the strongest trade they have seen in their lifetime are suspicious about the depth of its underlying strength and fear the possibility of an unexpected collapse.

“Slaughter cattle values have soared like a rocket since January and the market expects that this steep climb will continue right through to Christmas and then beyond,” explained NBA chairman, Oisin Murnion.

“It is not unnatural, in these most unusual circumstances, for beef specialists to feel nervous about the enormous cost of buying in, and then wintering, replacements and be worried that a sudden loss in market confidence might leave them some hugely expensive cattle and no way of recovering all their outlay.”

“However they can be reassured that swiftly expanding economies in China, Brazil and India, are soaking up all the spare beef the world can produce and Russia, which is the world’s biggest importer, continues to be desperate to buy as much beef as possible, from wherever it can find it, so its people continue to be well fed.”

As a result there are no pockets of cheap beef anywhere on the global market that can be grabbed by UK supermarkets and used to lever down the price of domestic cattle – even as it heads resolutely towards an average of 350 pence a deadweight kilo and may even move beyond.

“South America is not just producing less beef because more of its pasture is being turned over to maize, sugar cane and soya but it is also exporting less because a higher proportion of production is demanded domestically,” said Mr Murnion.

“On top of this the beef herd in the drought ravaged United States, which after Brazil is the world’s largest producer, is at its lowest level for 57 years and still falling.”

“New, hungry, buyers like South Korea, Egypt, Iran are competing hard with established importers on the world market while the EU, where prices have risen by an average of 18 per cent since January, is exporting three times as much beef onto a desperate international market as it did just a year ago.”

“And here at home a welcome combination of reduced imports, higher exports and stronger consumer demand is driving trade so hard that new, record prices are being confirmed every successive week.”

“The market, as always, is open to unforeseen risk created through an unexpected food scare, or a contagious disease outbreak, but in simply demand and supply terms it can only move onwards, and upwards, until a new, much higher equilibrium, emerges sometime in the future,” Mr Murnion added.

TheCattleSite News Desk



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