SCOTTISH farmgate prime cattle prices are continuing to show modest increases due to reduced supplies and increased demand over the Easter period and this weekend’s Bank Holiday.
Of more significance, however is the fact that values are now 11-12% higher than this time last year, while the premium for R4L steers north of the Border compared to those in the South, has widened to nearer 10p per kg deadweight compared to 3-4p in February, due to slightly more available supplies in England and Wales.
Latest figures for the week ending April 22, show the Scottish steer average increased by 2.5p per kg on the week to 363.5p, with such cattle hitting the R4L grade levelling at 367.8p. This compares to values in England and Wales at 344.5p and 358.6p, respectively. Numbers presented were again down on the week too with Scottish figure of 3597 head slipping 3.7% while those south of the Border fell to 10,345, which represented a drop of 2.9%.
However, despite significantly reduced heifer numbers in Scotland, the average for the same week at 363.4p, fell 1.9p for 1794 head or 18.2% fewer cattle, with those hitting the desired R4L spec making 366.2p.
In comparison, heifer values in England and Wales levelled at 345.1p up almost a penny for 5519 head which is 3.3% fewer on the week, with the R4L females valued at 355.6p per deadweight kg.
According to Stuart Ashworth, head of economics at Quality Meat Scotland, the recent price movement has an element of seasonality in it, with prime stock supplies historically tightening during April and into May before hitting a seasonal low in July and August. 
“Last year farmgate prices started to rise in the first week of May and two years ago it was at the beginning of June, so the 2017 movement is slightly sooner than last year,” he said. 
“Across Europe, in the main beef-producing countries, farmgate prices have risen at a more modest rate of less than 1% over the past two weeks, suggesting the Sterling exchange rate may be supporting UK prices.”
When converted to Euros, the UK price increase of 0.5% mirrors the general state of the EU market. UK farmgate prime beef prices remain some of the highest in Europe with only Sweden, Italy and Greece having higher prime beef prices.
Mr Ashworth added that the consumer market continues to be extremely competitive and passing higher farmgate prices further down the chain remains a challenge for meat wholesalers. 
The publication of updated consumer price information by the Office of National Statistics shows retail prices for food increased by 1.2% over the past year, a lower rate than overall consumer price inflation. 
However, despite recent increases, average beef retail prices during March were little different from a year ago. Some of the more expensive retail cuts are lower priced than last year and cheaper cuts like mince are slightly higher, leading consumers to do some switching from roasting joints to stewing beef and mince. 
“Overall, because for the past six months beef prices have been lower than they were during the equivalent period a year earlier, there has been some growth in retail purchases of beef,” said Mr Ashworth.
In contrast, lamb retail prices have been higher than 12 months ago, contributing to reduced fresh lamb purchasing.  Meanwhile, pork and poultry retail prices have fallen compared with prices a year ago and poultry meat, in particular, is still seeing growth in retail demand. 
Based on the experience of lamb, any significant increase in retail beef prices without similar disposable income inflation, would be likely to limit retail sales.  
Consequently, said Mr Ashworth, margins in the beef supply chain post-farmgate remain slim and farmgate prices will be sensitive to the number of cattle and volume of beef in the market.