The beef market showed a strong performance over the first four months of 2022, according to Mark Zieg, Bord Bia beef sector manager.
Beef has been in demand from all of our markets, driven by a supply scarcity which has been particularly evident in Europe. The re-opening of economies has boosted the foodservice sector and that has driven demand for beef, throughout all parts of the carcass but particularly in the case of manufacturing beef used in burgers and mince.
The average reported R3 steer price last week increased by 3c/kg to €4.85/kg from the previous week. In the corresponding week in 2021, the R3 steer was €4.04/kg.
For the year to date the Irish R3 steer price has averaged €4.54/kg against an average of €4.05/kg in 2021 and €3.63/kg in 2019. EU prices have also experienced a positive uplift with average male prices throughout the EU up 35% on last year’s levels. Beef supplies are tight across most European markets and prices for R3 young bulls have increased to an average of €5.13/kg.
However, there are significant variations across some of the major producing countries with prices in Germany at €5.60/kg, Spain at €5.04/kg, France at €5.00/kg and Italy at €4.59 /kg (excluding VAT) for the week ended April 24, 2022.
The German young bull price has fallen back from its highpoint of €5.99/kg reached at the end of March. The EU Prime Benchmark Price reached €4.98/kg last week, compared to an average value of €4.01/kg the full year 2021.
A total of 569,549 cattle have been processed during 2022 to date, an increase of 60,548 head from the corresponding period in 2021 (+12%).
This increase in throughput has been driven by an additional 29,943 prime cattle (+8%) and a strong increase in the cow kill by 22,498 head (+23%).
Lower carcass weights
In terms of production volume, some of the increase in cattle throughput so far this year will be offset by lower carcass weights.
The average steer carcass weight for the year to March this year was 346kg, back 6kg from January to March 2021, while the average heifer carcass weight was 312kg, back 3kg from 2021 levels. The average carcass weight for young bulls increased marginally by one kilo to 391kg.
The latest available cattle population statistics indicate an increase in the number of slaughter age cattle on Irish farms. In February 2021, there were 45,300 additional cattle aged between 18-24 months for beef production (beef sired and dairy males) on farms, which represented a 5% increase in cattle availability in this age group compared to a year earlier.
The additional cattle in this age range, combined with lower levels cattle exports to Northern Ireland, have contributed to higher supplies of cattle for slaughter in the early months of 2022.
Irish Cattle Breeding Federation (ICBF) data up to April 22, suggests a decrease of 1% (-17,399 head) in calf registrations. The decrease is driven mainly by an 8% (-30,132 head) decline in suckler calf births while dairy calf births increased by 1% (+12,733 head).
Looking ahead at the beef market
Initial forecasts for 2022 indicated a recovery in total cattle slaughterings for the year in the region of 80,000 to 90,000 head. Decisions made at individual farm level to counteract the sharp inflation in production costs will ultimately determine the revised figure.
This will see a progression in the trend to date of additional cow slaughterings particularly in late summer through to autumn. There is also the prospect of prime cattle being killed younger and lighter than previous years.
Cattle supplies in our markets will recover to some extent but overall beef supplies will remain well balanced.
Overall the EU Commission forecasts a further 1% decline in cattle production (after a 0.5% decline in 2021). This is borne out by the predictions from many of the main beef producers in Europe where declines are forecast: beef production in Sweden is predicted to fall by 4.3%, in Spain by 3.9%, Italian beef production to fall by 2.3%, French by 1.4%, and German by just 0.2%.
These figures will also be subject to producer decisions in terms of additional culling to mitigate rising production costs.
In the UK supplies also forecast only to increase marginally (+1%). Meanwhile, in terms of the global picture, the United States Department of Agriculture (USDA) predicts an overall production increase of 1% in supplies worldwide, while beef consumption and import demand are both forecast to increase by +0.5%.
Import demand is driven strongly by demand from China where imports are continuing the growth trend of the last five years, to increase by 6% in 2022.
While the Covid-19 situation has brought back some lockdowns in China, the experience of the last two years has shown that beef imports remained strong despite the disruption to out-of-home dining.
Similar import demand growth is also predicted for other Asian markets like Japan and South Korea, while import demand in the US is also predicted to grow by 2.7%.
However, while market structures look like they will support a good demand for beef imports, there are also a number of cautions on the horizon that have been added to by recent global events. Price inflation has become more evident to consumers over the initial months of 2022 and this has had a visible effect on retail beef sales.
In Britain, Kantar beef retail sales figures to March 20, indicate price growth of 6% and corresponding volume declines of 14.8%, resulting in a decrease in spend of 9.7%. In Germany, equivalent retail figures for January to February showed a price increase of 7% and a corresponding sales decline of 17%.
Figures in France for the same period indicate a 12% reduction in retail spend on beef. However, consumers have driven a very strong recovery in the foodservice channel with unprecedented demand for steaks and manufacturing beef for burgers. The European central bank latest forecast in March forecasted real GDP growth of 3.7% for the euro area in 2022, 0.5% compared to the December 2021 projections.
The main drivers are the impact of the Ukraine crisis on energy prices, confidence and trade. The duration and scope of impact of the war in Ukraine will play a large role in determining production costs, consumer spending power and as a result the consumption and demand for beef in the rest of 2022 and early 2023.
For more on the current beef market, click here.