UK farmers warned of ‘difficult road ahead for the cattle trade’

In Britain, last week reported cattle prices eased with GB R4L grade steers averaging at Stg 342.2p/kg (equivalent to 448.69c/kg).

According to reports in the UK, there is currently a ‘general malaise’ in the deadweight prime cattle trade in the UK.

However, last week the AHDB in the UK told farmers that 2016 is likely to again be a difficult one for producers

UK beef and veal production is expected to increase this year; latest AHDB beef and lamb forecasts suggest a 2% rise.

Irish Competition

In addition, it highlights a notable increase in calf registrations over the past couple of years and lower live exports last year mean that the number of cattle available for slaughter in Ireland this year is expected to be higher.

According to the AHDB, said a significant proportion of the increased Irish production could well be available to the UK market at competitive prices, given the Sterling: euro relationship.

It says the demand for Irish beef is likely to remain robust in some segments of the retail, foodservice and manufacturing sectors.

Retailers

As always, the prospects for the price developments will also depend on the retail side of the equation. In comparison with the EU, the UK economy is performing better and consumers have more disposable income. If this leads to increased spending on groceries, it could offer better prospects for beef sales.

According to the AHDB, in comparison with the EU, the UK economy is performing better and consumers have more disposable income. If this leads to increased spending on groceries, it could offer better prospects for beef sales, it says.

However, it does cite consumption trends in the UK that are now deep-seated and convenience is increasingly important. Two of the most popular beef dishes, roasts and stews, take far longer than the half-hour consumers now typically spend preparing and cooking their evening meal, according to Kantar Worldpanel.

Two of the most popular beef dishes, roasts and stews, take far longer than the half-hour consumers now typically spend preparing and cooking their evening meal, according to Kantar Worldpanel.

Consequently, primary red meat cuts look vulnerable in the context of modern lifestyles, the AHDB warn.

Specification changes

Adding to the pressure on prices due to the supply and demand situation, the year also starts with the major processors and retailers focusing on specification, whether it be movement, weight, conformation or age.

The AHDB says price penalties for cattle falling outside their favoured specification look likely to be a major issue for the sector this year.

It says while some finishers may be able to realign their systems quickly, for the majority this will take some time.

“This issue could well have a knock-on impact across the whole sector. Not only will the store trade be influenced by finishers’ decisions but the breeding intentions for suckler producers could come under examination.”

Outlook

At the very least, the AHDB has said that it is difficult to see how prices could increase from current levels, particularly once cattle supplies start to rise later in the year.

“Unless things do change, for example if demand performs much better than expected or the exchange rate moves into a more favourable position, the market could well see further decreases.

Advice for farmers

The AHDB is advising farmers that there is no doubt that prices for cattle meeting specification consistently fare better during periods of declining farmgate prices.

“As the market comes under pressure, achieving the right specification for conformation, fat class, weight and now movement will best help to soften the impact of any downwards pressure on cattle prices.

“While this has always been the case, it is likely to be even more significant this year and those who don’t adapt may find that the best cattle prices could well be even harder to achieve,” it cautioned.

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