Beef price falling
Deadweight beef prices have continued to fall throughout July and prices of around 475p/kg are being quoted for R4L steers, with further reductions expected in the coming weeks. This drop in price has come at a bad time for store finishers as some of the more expensive forward stores bought in April will now be coming ready and with the fall in price and the tightening of weight restrictions, it may be a challenge to see a margin in some of these cattle.
Whilst supply is steady, demand seems to have softened at the retail end which has put a downward pressure on the price. This could be a hark-back to pre-COVID consumer trends when the school holidays played havoc with buying habits and demand for beef tended to drop off in July but would pick up again late August once holidays etc. were past and people’s routines returned to normal.
In addition to this, we have a significant widening of the gap between UK and ROI beef prices, resulting in more imported Irish beef coming in and putting a ceiling on UK prices. This is down to ROI supplies and the pound strengthening, which makes imports more attractive.
Going forward, it is likely that we will see a tightening in the supply of cattle later on in August, but, whether this has a significant impact on price will largely be dictated by demand. By August we will see ABP take control of the Bridge of Allan processing facility and it may be a few months until we see the full impact that this will have on the demand for cattle in Scotland.
The store trade has remained strong for shorter keep cattle with fewer numbers available of all kinds. With many of the autumn season calf sales due to start in the next couple of months, it will be interesting to see how cautious finishers will be going into the winter off the back of the falling beef price.
Looking at overall GB cattle numbers, there is a 0.8% reduction in the younger end of cattle on farms compared to 2022 but Scotland looks to have similar numbers – will this mean a strong demand from south of the border for stores again?
Mainland Europe has seen demand soften and prices ease even on the back of reduced production figures. The only countries bucking the downward production trend are Australia and Brazil who are both seeing increases in beef production.
AHDB reports that Australian beef imports to the UK in June totalled 384t (5 yr average for June imports from Australia 103t – includes COVID years!). The trade agreement allows up to 20,616t per calendar year to be imported from Australia. It is worth noting that the average imports from Ireland per month is 15,400t.
Falling wholesale beef prices in China due to weaker consumer demand have caused a back log of product which is impacting the manufacturing beef trade globally, with wholesale prices back 6% on the year.
Cull cow trade has dropped by around 3%, as expected on the back of the weakening demand for manufacturing beef and the strengthening of the pound, with numbers available expected to rise in the normal pre-housing period, it is unlikely that there will be any significant price rises in the coming months but returns from cull cows continue to be reasonable.
With winter barley harvest finished in many parts of the country, with reasonable silage yields and spot feed prices dropping, we look to be in a better position than this time last year, regular rainfall in July has given us continued grass growth with the right amount of warm temperatures to keep cattle happy outside. Whilst prices may be easing back many of the challenges facing beef producers this time last year are a little bit smaller this year, hopefully leading to more optimism as we head into autumn.
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