EX-FARM prices for beef and lamb are never the best in January or February following the excesses of Christmas and New Year, however the good news is, with the backlog of cattle waiting to be killed significantly less than in 2016, values should start to level out soon.

While prices for finished steers and heifers have been slipping in recent weeks and remain below those of 2015 at this time, they are at least some 18-20p per deadweight kg more than this time last year.

Latest figures from the AHDB for the week ending January 21, show that while average Scottish steer prices remain at 18p per dwkg higher than those south of the Border, at 364.1p, they are down slightly on the week, albeit with a 5.3% increase in numbers.

Heifer prices in Scotland were also down slightly at 367.0p per dwkg and for 1.8% more sold – some 15.3p higher than those in England and Wales.

Cattle hitting the R4L spec’ in Scotland averaged 368.4p and 369.3p for steers and heifers, respectively.

However, while prime values have slipped, there is renewed optimism compared to 2016, according to Aberdeen and Northern Marts’ auctioneers, Alan Hutcheon and John Angus.

“There is not the backlog of cattle or the amount of heavy cattle about waiting to be killed compared to last year, so the market should sort itself out a lot quicker,” said Mr Hutcheon, who sells the prime cattle at Thainstone.

“Last year, there was just no enthusiasm about the job as so many people had to wait for up to four weeks, in some instances, to get their cattle away which were already too heavy for the market.

“This year, there are not the heavy cattle in the first place and there is maybe only a week or two waiting list to get into abattoirs.

“Farmers are a lot happier too, as cast cows are up £40-£50 a head on the year and for good numbers due the fall in the value of sterling and the increased demand from the continent,” said Mr Hutcheon.

Adding to the positivity, store cattle auctioneer, John Angus, said: “Store cattle prices are on average up 14p per kg and there is a lot of good well-bred cattle about and plenty of demand.

“You’ve got to realise that we’ve had about a month without the numbers of stores to sell compared to last year as people are selling their cattle younger, so that finishers can sell them younger and at a lower weight to avoid being penalised for overweight carcases.

“Throughout much of January last year, we had two rings going selling cattle at 600kg, whereas this year, we’ve only had one as more people are looking to sell their stores at 400-450kg, as the finishers no longer pay more for cattle at 500kg. Finishers are looking to finish cattle two months earlier than they were last year.”

Furthermore, Mr Angus said demand for Charolais crosses was as strong as ever, with the breed often commanding the lead prices due to it’s ability to finish quicker.

However, while there is a ready demand for store cattle, feeding them has become a more expensive issue due to the rise in the value of feed barley and straw.

“Barley and straw are just not as plentiful as they used to be as an increasing number of arable farmers up here grew rye for digesters last year,” concluded Mr Angus.

Looking much, much further ahead, beef and veal production in the EU is expected to decline from it’s current position over the next decade, according to the latest EU-commission’s Medium-term Outlook report.

It stated that EU beef and veal production is expected to peak at 8.15m tonnes this year, a similar level to that in 2016.

This will be driven by high dairy cow culling due to weak milk prices and follows an expansion of the dairy herd in anticipation of the removal of milk quotas. Hence, by 2026, beef production is expected to decline to 7.5m tonnes.

The fall is expected to be influenced by improving dairy cow productivity, which is expected to depress dairy cow numbers over the next 10 years.

Equally, with key producing states like the UK (excluding Scotland) and Germany declining the option to introduce coupled support payments for the specialist beef sector, the EU suckler herd is also predicted to decline.

Thus, by 2026, the EU cow herd overall is forecast to be 5% smaller than its estimated 2016 size, of 33.6m head. Ultimately, the effect of this will to limit the availability of animals for finishing.

However, following production trends, consumption of beef and veal is forecast to decline over the next decade and, imports are expected to increase as trade quotas are filled.

Furthermore, with growing competition from cheaper American beef, exports of beef and veal are expected to fall, particularly over the next five years.

Increasing competition is also anticipated to depress the live export of animals, which was successful during 2016 and may continue to be so this year.

The commission also forecasts that an increasing supply of low-cost product from the Americas is likely to drive down world beef prices over the first half of the next decade.

But with EU production tightening post-2017, domestic prices might counter the general trend and increase during this period, as a new supply and demand balance is reached.