Europe-wide drought forcing factories to freeze beef

With the Europe-wide drought resulting in additional cattle coming onto the market, meat factories are being forced to freeze beef, according to Cormac Healy – senior director with Meat Industry Ireland (MII).

In a statement released to AgriLand, Healy explained that factories – in recent weeks – have seen “significantly higher cattle numbers coming out than is normal for this time of year”.

To date this month, cattle throughput in Ireland has been up over 11% on the same period last year and 18% higher than in 2016, he added.

The same trend is evident in many other EU member states, Healy outlined.

“Additional cattle are coming onto the market throughout Europe, which is experiencing the same drought conditions as Ireland – resulting in more beef than the market can contend with right at this moment.

Meat plants are purchasing in more cattle, on average 3,500 head per week more than this time last year – but it is a delicate balancing act at present.

“This is predominantly a fresh meat business now and pushing more beef into a market which is facing increased supplies from all parts of Europe – coupled with increased imports from South America, up 16% – adds to the pressure on price.

“On the other hand, as plants process more cattle than the market is expecting, they are forced to freeze product – which immediately devalues it.

“Over the last number of weeks, there are reports of frozen stocks building,” he said.

Market factors

Continuing, the senior director outlined that “weaker demand” in the marketplace for particular beef cuts and increased supplies of beef right across Europe are the “real market factors responsible for Irish finished cattle prices falling over the last six weeks – from their peak level in mid-June”.

Despite these recent market developments, the Department of Agriculture, Food and the Marine’s reported prices for last week show that Irish plants paid 405-406c/kg for R-grade steers and 418c/kg for R-grade heifers, Healy said.

“Irish beef processors are paying prices that are still considerably ahead of the overall EU average and well ahead of competing product in many of our export markets.

They are handling additional cattle coming out in a challenging market environment. We have come through the first six months of 2018 which have seen a very strong price performance.

“Recent criticism of the beef processing industry is inaccurate and unwarranted,” he said.