Meat Market Update October 29, 2013 12:00 am Beef GB beef prices remain comprehensively above year-earlier levels, with tight supplies being the main price driver. Both domestic production and supplies in the EU have been lower, not only due to reduced numbers but because cattle have been finished at lower weights. There has been a slight easing of prices over recent weeks as supplies have picked up, whilst the relatively mild weather has not seen the same increase in demand. This is not expected to last long as seasonal demand applies upward pressures to prices. Looking ahead any relief in supply pressure is not expected. The latest June Survey of Agriculture for the UK reveals a year-on-year decrease of 2.8% and 1.6% in the beef breeding herd and the dairy herd respectively (see earlier article). Production next year is unlikely to increase. Cattle may be finished at higher weights due to lower feed costs and better forage quality this year, but this is likely to be offset by lower numbers. Better forage quality and an ease in cereal prices will lead to lower feed costs this winter which will help margins. Lamb Prices have followed their seasonal decline over the summer months, but remain ahead of year-earlier levels following the slow start to the year. As we lead up to Christmas, demand is expected to increase and apply upward pressure on prices. Last year prices fell at the end of 2012 and the beginning of 2013 due to the large carryover of lambs from the previous season and also exports from New Zealand. With a lower domestic lamb crop this year and tightening supplies from New Zealand, which are also expected to be more expensive compared to last year, this downward price pressure is not expected again this winter. Pigs The GB DAPP has remained above year earlier levels since this time last year. However, high feed costs have dominated the headlines for the most of this time and high costs of production have eroded any increases in prices. But feed costs have eased following this year’s better global harvest and are expected to remain lower into 2014. Latest AHDB/BPEX provisional figures show that the average cost of production in October was 147.5p per kg. Although it must be remembered, pigs being sold in this month will have been fed on feed that was bought when the price was much higher. It is therefore likely to be early 2014 before producers are consistently receiving positive margins. Prices have eased recently, but strong domestic demand should see prices remain firm into 2014. This demand from retailers and a fall in supply from the EU, possibly due to the welfare regulations introduced at the beginning of the year and strong demand from China should help the sector to continue to recover.
