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AHDB Cattle and Sheep Weekly

24 March 2015

EBLEX Cattle and Sheep Weekly - 24 March 2015EBLEX Cattle and Sheep Weekly - 24 March 2015

Slow retail demand impacts on cattle trade

In week ended 14 March cattle values generally eased compared with the week earlier. This confirms an ongoing downward trend in farmgate prices, largely fuelled by subdued domestic retail demand. The number of prime cattle coming forward is currently ahead of immediate processors and retailer requirements. Prices for most types of prime cattle were back on the week and consequently, the overall GB prime cattle average price was back 2p to at 355.7p/kg

Against a broad backdrop of robust demand lately, processors’ demand for cows is reported to have been varied in the latest week. Those filling domestic requirements were more keenly in the market than those with a range of export customers. The overall cow average came back on the week for the first time since mid-January, being back 3p to 231.7p/kg. Despite this modest easing it is worth noting that the cow trade still continues to trend around last year’s position.

With reports starting to suggest that waiting times at processors could be emerging, unavoidably, concerns about the evolution of farmgate prices will be developing. This is especially after the decline in the summer last year when the supply/demand balance was very unfavourable for producers. In contrast to last year, supplies in the UK and Ireland will both be lower this year. Which, in the broad picture, offers support to the market. However, there is a downside risk, particularly for the shorter term, presented from the current sluggish retail side of the equation. The upcoming Easter holiday offers some potential to deliver additional retail demand, although this could turn out to be tempered by the fact that most promotional activity is likely to be on lamb.

Cuts take a greater share of the export mix According to latest data from HMRC, beef and veal exports in January are recorded as being back 4% back on the year at 8,100 tonnes. The decline was largely on the back of a drop off in trade to the Netherlands as shipments to Ireland and France were both higher. Despite the decline in volume, the continued shift away from fresh/chilled carcase shipments to higher-priced cuts was evident again. Almost 50% of the total export mix was in the form of boneless cuts, while in January last year it was around 40%. With this product trading at £4,400 per tonne, as opposed to £1,650 for fresh/ chilled carcasses, it is clear how important this development is in delivering additional returns to the sector.

Imports were again above year-earlier levels, although the uplift was not as significant as in many months last year. At 20,600 tonnes, volumes were up 8% on the year. There was a notable increase in product from Ireland. It remained competitively priced as sterling continued to gain against the euro. In mid-January, the value of sterling against the euro was up as much as 8% on the year earlier. In contrast shipments from the Netherlands were back significantly.

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