Written by Rachel Martin
Scottish prime cattle prices have lacked direction for the majority of the summer and over the past couple of weeks have drifted lower, according to the latest market analysis by Quality Meat Scotland (QMS).
Last year, producer prices climbed steeply through August and September before sliding steadily from October to December. Consequently, when compared to last year, current prime prices are 12% lower.
Irish beef protests
It comes as Irish farmers wind down their protests at meat plants. The protests began after significant cuts were made to the base quotes offered by processors.
This time last year, farmers in the Republic of Ireland were fetching between €3.70 and €3.75/kg for bullocks and €3.80-3.85/kg for heifers. In comparison, this week the price is down as low as €3.45-3.50/kg for bullocks and €3.55-3.60/kg for heifers.
The Irish beef protests also hit out against other factors such as the 30-month age limit, four-movement rule and 70-day residential period.
However, according to Stuart Ashworth, QMS director of economic services, Scottish and Irish farmers are not the only producers facing difficult market conditions.
“American beef producers currently receive prices 7% lower than a year ago, while across the EU, average producer prices are 10% lower for prime steers and 5% lower for prime heifers,” said Ashworth.
“Similarly, when quoted in US dollars, major traders Argentina and Brazil are also seeing a slide in producer price.
“However, the effect of exchange rate movements is apparent in that the Brazilian price, when quoted in the local currency, is around 5% higher than last year.
“Australia is also benefiting from weaker exchange rates which have helped to push their beef producer prices 5-7% higher without affecting their competitiveness on international markets.”
Lower prices despite lower volumes
Unusually, producer prices in many parts of the world have slipped despite lower volumes of beef being produced.
The European Union reports total beef production in the first half of 2019 was 1% lower than it was in 2018.
The USDA also report lower throughputs at their abattoirs than this time last year which combined with a reduction of around 4kg in carcase weights, means lower domestic production in the US.
Although not as significant, the UK also reported lower weekly kills of prime cattle through the past quarter but because of increases in carcase weights of around 5-7kg, the volume of beef produced has increased.
“Provisional UK trade data for July shows beef imports to be significantly lower than they were a year ago,” added Ashworth.
“Over the first seven months of the year, customs data shows imports to have fallen 9% while exports have increased by 14% resulting, despite higher carcase weights, in a lower volume of beef on the home market.”
In France where the current producer price is a more modest 1% lower than a year ago, their production has fallen 3% over the first half of the year. Lower production and lower imports point towards lower consumption in France.
Similarly, beef imports into the EU over the first seven months of 2019 have been 4% lower than in the same period last year.
Adjusting for trade and a fall in production, the volume of beef available for consumption within the EU has dipped below last year’s levels despite producer prices weakening.
“European beef prices have therefore come under pressure at a time when the volume of beef produced has been sliding, suggesting weaker demand for beef,” concluded Ashworth.
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