Prime beef values are again on the up, with this week’s increase fast approaching the fourth consecutive month of price improvements, while cull cattle are also witnessing price rises, albeit on a reduced level with increased supplies available.
Top quality cull cows are now valued at more than £3 per kg deadweight, with the best prices to be found south of the Border where R4L cows were priced at 303.6p for the week ending July 7, which compares to 300.8p for the same grade in Scotland. Best prices in Scotland are paid for R3 and R4H cows at 301.3 and 301.1p per dwkg.
Yet, UK abattoirs are handling more cows, according to a report from Quality Meat Scotland, which claims throughputs of more than 2% in May compared to the same month in 2016.
“Indications are that there has been an increase in beef cow slaughtering this year, while dairy numbers have reduced slightly,” said Stuart Ashworth, head of economics services with QMS.
“While this is slightly concerning in terms of the outlook for the size of the suckler herd in the future, there are indications from census and BCMS data that there are more beef-sired heifers currently on farms that could be used for breeding than there were last year.”
Nevertheless, during the first four months of 2017, GB and Scottish calf registrations have dipped by around 0.5% on last year.
It is not just the UK that has seen firm cull stock prices, with prices also looking strong across Europe. In many major beef-producing countries prices are 5-10% higher than this time last year.
“In some countries, for example Germany, cull cow prices have increased by more than prime stock prices. However, in Ireland cull cattle prices have cooled in recent weeks and are currently less than 1% up on last year having been running around 5% higher for most of the year,” said Mr Ashworth.
In Ireland these higher prices earlier in the year were achieved despite Irish cull cattle slaughter numbers being up 12.5% over the first half of year.
Strong prices for both prime and cull stock across Europe point to demand exceeding supply and – given the particularly strong cull stock prices – an increased demand across Europe for manufacturing beef.
A swing towards lighter carcase weights in the UK and Ireland, although not for cull cows, has reduced beef production which, all things being equal, would support producer prices in these countries.
There are signs of firm demand for manufacturing beef which would support cull stock values in the short term.
Kantar Worldpanel retail market research suggests a growth in sales of added-value beef products in the UK, and UK Customs data shows a growth in the imports of frozen boneless beef, although fresh chilled imports have fallen.
However, Mr Ashworth noted that historically UK cull stock slaughter volumes are typically at their lowest in May and June and peak in October and November.
Another factor supporting the wider European beef market has been a growth in exports outside of the EU of 17% in the first four months of the year. This has been accompanied by a useful growth in markets associated with lower value cuts, and a reduction of imports of 6% over the same time frame. The UK, too, has seen some modest growth in exports outside of the EU and reduced imports.