Beef prices are forecast to remain stable or potentially increase next year, according to an outlook report published by Teagasc today, Tuesday, December 7.
Speaking at the Teagasc 2022 Economic Outlook for Irish Agriculture conference, Teagasc’s research officer, Jason Loughrey, outlined that a reduced demand for young cattle and a subsequent “drop in prices for young cattle” has been forecast for next year.
“2021 has been a year of inflation on both the outputs and inputs side. Finished beef cattle prices are up 12% and mart prices are up 8-9% in 2020, depending on the time of year,” Loughrey said.
Commenting on gross margins, Loughrey said: “A 4% increase was seen this year in cattle-rearing farms’ gross margins.”
Furthermore, he outlined that a 9% increase in gross margins was experienced on cattle-finishing farms.
However, commenting on net margins for cattle rearing farms this year, Loughrey said: “There are no major changes on the net margins; finishers are doing a little bit better and cattle rearers are doing about the same.
“If you compare net margins this year to 2018 or 2019, it is better, but margins are still relatively low.”
Cattle finishing farms
Loughrey continued: “Net margins have improved on the average cattle finishing enterprise and the amount will differ depending on the time of year farmers are finishing their cattle, but the average would be up slightly for specialist cattle-finishing farms.
“The top third of finishers are up and improved their net margin, the middle third is up slightly and bottom third have seen no improvement,” he added.
Industry trends
Commenting on the current trends in the beef industry, Loughrey said: “On the input side, feed, fuel and fertiliser all increased this year, but beef prices are higher this year – since the summer months.
“Beef exports are also up and beef is reaching record prices globally,” he added.
However, Loughrey added that “EU beef production is set to decline in 2022” and noted there is a slight declining trend in the consumption of beef.
2022 outlook
Looking to 2022, he forecast there would be “difficulties posed by high costs in 2022”.
Commenting on where beef price would be next year, the Teagasc officer said: “I don’t see a probability of a price decline and there may be reason to believe it [beef price] will be somewhere higher.”
In relation to next year, Loughrey said that “the total input costs are forecast to rise by 12%, leading to a 22% decline in cattle rearers’ gross margin, meaning the average cattle rearing enterprise is forecast to be negative in 2022.
Net margins in cattle rearing have been forecast to drop below the average of the last 5-10 years. The net margins in cattle rearing are expected to drop also but not to as great an extent as cattle finishers.
Concluding, Loughrey explained: “The squeeze on margins for finishing enterprises means there will be a reduced demand for young cattle and a subsequent drop in price.”