Meat Market Update

Beef Market

The beef market has been under pressure for the first half of 2014, largely due to the increase in supplies.  Currently UK production is about 3% ahead of year-earlier levels; favourable feeding conditions have increased carcase weights compounded by an increase in slaughterings.  But prices have been steadily rising since the summer, although are still about 50p per kg deadweight less than at the same time in 2013. Looking ahead, supplies are expected to be lower in 2015.  Domestic production is forecast to fall next year.  Figures from the British Cattle Movement Service (BCMS) reveal calf registrations last year were 81,000 head less than the previous year and information in July from the Service confirmed there were significantly less cattle on farms between the ages of 12 and 24 months.  The AHDB has also forecast imports to be less than year earlier levels, mainly due to lower production in Ireland.  Exports from the UK are forecast to remain similar to 2014 levels.  The result should be less pressure on the market and a firming of prices, but this will depend on consumer demand.  

Lamb Market

The lamb market has followed its seasonal decline, and is trading at levels lower than the previous year.  UK lamb slaughterings are expected to remain higher than in 2013 for the remainder of this year, continuing to put pressure on prices.  This year’s lamb crop was one of the largest in recent years and the AHDB is forecasting production to rise by 5% year-on-year in the final quarter of 2014.  Numbers for the first quarter of next year could even rival 2013 when poor weather conditions in 2012 led to a large carry over. Favourable feeding conditions may contribute to a higher carry over into 2015.  Looking further ahead, UK domestic production for 2015 is forecast to rise by 3%, resulting in the highest level since 2008.  This is expected to be the main driver for prices over the coming year as exports and imports are forecast to remain at similar levels to this season.  This suggests prices may struggle unless consumer demand starts to improve.

Pig Market

The pig price in the UK has started to fall again after a plateau in spring and early summer.  Colder weather in August meant the anticipated barbeque season was cut short.  For the week ending 15^th November the EU-spec GB SPP price fell to a new low at 146.89p per kg.  This is 16p below the price when the new price series began back in April.  Slaughterings have increased for four consecutive weeks, continuing to put downward pressure on prices.  EU markets have stabilised recently, meaning the continuing drop in UK prices is largely due to a fall in demand.  The gap between UK and EU pig prices has now reached unprecedented levels, suggesting the link between them has broken.  UK prices have generally traded at a premium to EU prices but over the last year this has increased significantly.  A surge in imports and a fall in exports would have been expected but this has not been the case.  According to BPEX, exports haveactually increased by 11% for the year to date and imports were only up by 4% for the first three quarters of 2014.  The ‘de-coupling’ of the two markets can partly be explained by a commitment by retailers to source UK meat.  Whether this continues in the face of such a price spread, and a supermarket price war, remains to be seen.