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AHDB Cattle and Sheep Weekly


13 March 2015

EBLEX Cattle and Sheep Weekly - 13 March 2015EBLEX Cattle and Sheep Weekly - 13 March 2015


Cattle trade levels

In week ended 7 March the deadweight trade broadly levelled. Processor requirements for commercial and scheme cattle appear to have slowed slightly on the back of a cooling in consumer demand. There are fears that some of this slowdown could be attributed to increased shipments of beef from the Republic of Ireland due to the attractiveness of the sterling/euro exchange rate. Despite this, adequate domestic supplies will also have played their part in tipping the supply/demand balance. Despite estimates suggesting the overall number of cattle coming forward was below the week earlier, steer throughputs were estimated to be up to their highest weekly level of the year so far.

Prices for most types of cattle remained close to those in the previous week and, consequently, the overall GB prime cattle average price was almost unchanged at 358.0p/kg. Overall steer and heifer prices were much the same as in the previous week at 359.4p/kg and 361.2p/kg respectively. In contrast, young bull prices came back notably as buyers became more selective. The overall price was down 4p on the week to 322.5p/kg, while R3 young bulls were 6p cheaper at 343.4p.kg.

It appears that demand for cheaper cuts of beef continues its robust performance, as cow prices increased for another week. Continuing to demonstrate that adding finish to cows that will improve undoubtedly adds value, prices for well fleshed cows at -04L specification moved up another penny to average 254.0p/kg.

Beef sales benefit as consumers switch allegiance

Beef was the only red meat to record an overall year-onyear increase in volume sales in the November-January period, according to the latest data from Kantar Worldpanel. Sales have been supported by consumer switching, with gains made from fresh pork and chicken in particular. Volume sales improved across all categories but sales of roasting joints showed the largest year-onyear increase. This uplift was spread out among the major four retailers, while the hard discounters recorded a fall in volume sales. The big four retailers were particularly price competitive in this category over the three month period, with promotional activity driving a fall in the average retail price. Average prices for roasting joints fell by 8% compared with a year earlier. This resulted in an overall reduction in the amount of consumer spending on the category despite the increased volumes. Despite a drop in the amount of mince sold on promotion, cuts to base prices across many retailers resulted in lower year-on-year average prices. This prevented any increase in consumer spend on mince over the period.

Increased interest in native-sired cattle continues

Calf registrations last year were modestly ahead of 2013, according to data from the British Cattle Movement Service (BCMS). While an increase in native breed registrations does point to some positivity in the sector, the increase in overall numbers is likely to still have only a limited impact on production levels over the medium term. More details can be found on the EBLEX website.

Lamb prices move up again

In week ended 11 March the liveweight lamb trade at GB auction marts remained firm. The OSL SQQ edged up another 3p on the week to average 197.9p/kg, broadly level with the corresponding week last year. This takes trade to its highest point so far this year. This comes despite supplies seeming to remain plentiful, with throughputs 15% ahead on the week. As such, it appears that steady demand has continued to underpin trade once again as Easter creeps ever closer. Despite the apparent positivity attributed to the start of Easter procurement, with only three weeks to go until Good Friday (2 April), the market remains finely balanced. If lambs come forward in higher numbers they could, to some extent, keep a lid on the degree of any upwards pressure on farmgate prices.

Deadweight prices in week ended 7 March were still following the evolution in the liveweight trade, with the overall GB OSL SQQ up 9p on the week to an eightmonth high of 437.4p/kg. Again, this is somewhat promising in light of a stronger exchange rate between sterling and the euro. However, in the fortnight prior to Easter last year the SQQ was around 490p/kg and demand will need to perform well if that price level is to be achieved this year.

Lamb sales fall back as Christmas promotions end

According to the latest data from Kantar Worldpanel, lamb purchases recorded the largest proportional fall in volume terms of all the red meats in the latest three month period, ending 1 February. Only a small increase in the average price prevented expenditure falling over the period. Notably, most of the decline in lamb purchases came in January, a time when beef was performing strongly on the back of increased sales of mince. With the exception of stewing cuts, which hold only a relatively small proportion of overall lamb sales, all categories recorded a drop in sales, compared with the corresponding period last year. Promotional activity for leg joints over the Christmas period supported volume sales in this category in December but monthly volumes have since dropped back to October levels as the Christmas promotions ended. While the hard discounters recorded little overall change in lamb sales, they performed relatively well in mince. Notably, in the three-month period, this segment of the retail environment sold more lamb mince than two of the big four retailers.

Problems on the Spanish sheep market

The Spanish sheep market continues to experience major problems, with both production and consumer demand falling. Developments in Spain have some implications for the United Kingdom. Much of the Spanish trade to the Mediterranean region consists of heavy lamb and so can compete with British lamb. Read more about developments on the Spanish lamb market on the EBLEX website.

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