‘Steady as she goes for cattle prices’
The projections were outlined today by Kevin Hanrahan, principal research officer at Rural Economy Research Centre speaking at the Teagasc Outlook 2014 conference in Dublin.
He said: “EU beef supply will increase marginally next year. However there will also be some increase in demand within the EU.”
“Global beef markets remain relatively tight and imports of beef into the EU which are forecast to grow in 2014 are not expected to undermine EU price levels. The ongoing weakness of the euro-zone economy remains a drag on demand for beef in the EU.”
Hanrahan also noted that reports indicating further recover in the UK economy was positive.“The UK remains Ireland’s most important beef market and the relatively strong growth in the British economy and falling unemployment is forecast to lead to increased demand for beef.”
As a result Irish finished cattle prices are forecast by Teagasc to grow by three per cent in 2014.
According to Hanrahan, this year the beef price in Ireland was complicated somewhat due to divergent price developments along the cattle supply chain. “In 2013 we saw finished cattle prices going higher for all types of cattle other than young bulls. But in Ireland we say weanling prices come down quite strongly.
“This means the output value for enterprise that are selling young animals is different from output on those enterprises buying in animals and finishing,” he noted.
As a result of this, Teagasc forecasts young cattle prices to grow by more than finished cattle prices as the divergence in these prices in 2013 reverses.
In terms of costs, Hanrahan commented: “Direct costs of production, particularly concentrate feed and fertiliser expenditure is forecast to decline dramatically in 2014.
“On the basis of normal weather conditions use of both concentrate feed and fertiliser fall from the high levels estimated for 2013.
“Reduced usage volumes when combined with forecast declines in both feed and fertiliser leave direct costs on cattle rearing and cattle finishing enterprises down 16 percent and 20 percent respectively,” he added.
In terms of farm incomes with higher output values as a result of the forecast growth in cattle prices, single and lower direct costs of production, single suckling gross margins in 2014 are forecast to recover from the low levels estimated for 2013.
Hanrahan explained: “In 2014 gross margins per hectare on single sucking enterprises are forecast to reach €261 per hectare. The average income on cattle rearing farms is forecast to increase by 30 per cent on the 2013 level bringing the average income to €11,000.
“Higher young cattle prices reduces the positive impact of higher finished cattle prices on cattle finishing enterprise output values. Lower direct costs of production lead to forecast growth in gross margins of 15 per cent.”
“In 2014 gross margin per hectare on cattle finishing enterprises are forecast to be €691 per hectare,” he concluded.