February 2012

The market price remains firm and overall prices are 27% higher for carcase weights than a year ago. This impact has been spread across all the cuts with trims for mincing and forequarter cuts for braising and dicing carrying the biggest impact with increase of up to 30% from last February.

 

Since 2010 the UK have opened 37 non EU Export Markets, so now processors can get the best price available anywhere in the world. We will now see supermarkets fighting for beef cuts against vibrant export markets which will only push beef prices up further and impact on the catering and food service market. With no cheap imports, declining cattle herds and strong worldwide demand for UK Beef, prices will remain firm throughout the year and rise even higher if demand increases. Added to this is the increase in cull cow slaughtering due to the high beef prices which is adding to future herd reductions in the UK.

 

Prices for steak cuts remain static due to poor demand across Europe.  Argentina has seen its lowest export levels since 2001. Brazil continues to develop its booming home market, with exports to the EU the lowest for 7 years. Uruguay continues to increase its live cattle exports with a 39% increase in 2011 and exports down by 8.5%. Paraguay is stricken with Foot and Mouth and we still cannot see the opening of Botswana for beef supply.

 

With global supplies for beef tight and new emerging markets it is safe to say we cannot expect to see the cheaper imported beef supplies of past years. Forward predictions are that the steak meat market will start to increase in line with the Spring menus and light nights as operators look to drive volume through their businesses with large discount offers.

 

New Zealand exports will be at a 48 year low for 2012. There is a worldwide shortage of lamb at weights around the 400g size. This is a reflection on the global lamb shortage. The lamb shoulder market has also seen increases of 24% year on year due to the continued sales growth into China. The large increases seen for lamb last year has seen a dramatic fall in the % share of retail meat counters and promotions. Likewise many food led outlets have taken lamb off the menus to the price. Many New Zealand farmers are reluctant to go back to such a labour intensive production system and will continue with the growth in beef and wine as a better option.

 

In terms of eating quality we are into the most difficult period for UK lamb, due to the season. Prices remain firm. We expect prices to increase throughout the coming months as farmers retain their gimmer lambs (female lambs) to increase the herds, in order to increase lamb numbers over the coming years. A key driver in this decision is we have seen whole lamb prices increase from 2010-2011 from an average of £56.00 per head to a peak of £97.00 per head in May. Current average carcase price is £76.00. With lamb so expensive the key point is how to make the cuts affordable.

 

Pork is the largest global meat production sector at 110 million ton, which is an increase of 3 million ton on 5 years previous. This furthermore demonstrates how pork is now seen as an alternative option to higher cost protein meats.

 

Pork is in the control of the large processors and their supermarket masters with a continual battle to keep UK production at their current levels. We have seen unprecedented price rises with increases of 16% versus the same period of last year. The expected drop in pork prices have not happened which in turn is good for UK producers with production increasing by 6% over the last year.

 

We forecast pork prices to increase throughout the year as breeding sow numbers across the EU are reduced. This is on the back of new legislation that will come into effect in January 2013 that requires group housing of sows against the crate system, creating higher production costs and costly changes to the units. The UK has already implemented the changes and look forward to a level playing field with our European friends.

 

EU prices remain static while the prices for UK poultry have increased. This is mainly due to customers looking for a point of difference such as Red Tractor. If prices remain depressed farmers across Europe are expected to reduce their flocks to drive prices up for a better return.