AHDB Cattle and Sheep Weekly
26 September 2014
Cattle Trade Firms Again
In week ended 20 September, the deadweight cattle trade moved in a positive direction again, despite reports suggesting that trade is starting to level and overall throughputs being unchanged on the previous week. With the market continuing to benefit from solid processor demand, the GB all prime deadweight average price increased by over 2p on the week to 346.5p/kg. As such, it is edging closer to the £3.50/kg threshold which represents a reasonable target for many producers in the current climate. Despite more steers coming forward compared with the week before, R4L’s strengthened almost 2p to reach 358.2p/kg, their highest position since early May.
The cow trade regained some of the ground it lost in the previous week. At 246.7p/kg, the –O4L cow average was up 3p on the week. While the difficulties in the dairy sector in recent weeks appear to have acted as a trigger for more cows coming forward, firm demand, in particular for heavier cows, remains.
UK Production Up Significantly in August
UK prime cattle slaughterings in August were up 9% on the year, to 143,300 head. With double digit increases in all regions of the UK, steer slaughterings increased 23% on the year to 71,400 head. This represented the highest August steer throughput since 2011. In addition, having been below year earlier levels in June and July, heifer numbers started to track above year earlier levels once again, being up 5% at 50,500 head. The increased heifer throughput was entirely attributed to higher numbers in England and Wales. For both categories, the increase in slaughterings is consistent with the recent report by Defra that showed there were more cattle over 2 years of age on the ground in England as at June. In addition, current AHDB/EBLEX estimates suggest that
throughputs of steers and heifers so far in September have followed a similar trend. In contrast, young bull throughputs were back nearly 17% on the year at 21,300 head.The better conditions have once again had a positive impact on carcase weights. Consequently, combined with the higher slaughter numbers, UK beef and veal production for the month was 12%, or 7,000 tonnes, higher year on year at 64,500 tonnes.
Irish Dairy Herd Expands
Despite overall cattle numbers levelling on the year, June Irish cattle survey indicated a continued robust level of confidence in the dairy sector. With producers gearing up ahead of the removal of milk quotas in 2015, the number of dairy cows in the herd increased over 5% on the year. In contrast, and as in England, beef cow numbers were back 2%, reflecting the on-going concerns over profitability in the beef sector. The survey again reported more cattle on the ground over two years of age, likely to come forward in the remainder of this year. However, as expected, it gave an indication of lower supplies into 2015 and 2016.
Prices Still Lower But Signs of Stabilisation
With the liveweight trade continuing where the previous week left off, the GB NSL SQQ in week ended 24 September was down nearly 4p on the week, averaging 149.1p/kg. Prices were at their highest at the start of the week on Thursday 18 September, at 150.8p/kg, although that was over 5p lower on the week. However, prices did look to be showing some stabilisation by the end of the week, finishing on Wednesday 24 September at 148.8p/kg, little changed on the week. The pressure on the market remains, as supplies outstrip demand. Since the start of September, estimates indicate lamb numbers have been over 3% higher on the year.
These increased numbers have likely been compounded by increased carcase weights (see below). This may also indicate more lambs are out of spec, which will not be helping prices. While supplies have been higher, indications are that demand both at home and abroad is currently the bigger issue. Demand from the export trade looks to have been particularly weak, as the French market still struggles with a poor economic situation. Additionally, the strengthening of sterling against the euro has done no favours for the trade.
While the presence of New Zealand lamb on the market is still attracting headlines, the indications are that volumes are still relatively low (see below) and demand is the key issue. The market now turns to the Muslim festival of Eid-al-Adha, which falls on Friday 3 October and may inject enough demand for prices to recover to some degree. Meanwhile the deadweight trade continues to show some notable resilience in the face of the pressured liveweight trade. In week ended 20 September the GB NSL SQQ was actually marginally higher on the week at 357.0p/kg.
New Zealand Exports to UK Lower
Despite UK July imports from New Zealand being 7% higher on the year (although volumes were unchanged overall) this looks like a blip and the volume of New Zealand product on the UK market should still be lower on the year. August shipments from New Zealand to the UK were reportedly down 5% on the year. Given the shipping times from New Zealand, these lower volumes should have started to enter the UK market
from early September onwards. As such, current volumes of New Zealand product should be at a lowebb, both seasonally and compared with recent years. Additionally, the average value of these exports is considerably higher than they were a year ago, bein 14% more expensive. With production and exports in the 2014/15 season (October –September) forecast to be around 3% lower compared with this season, and a largely favourable global market, these trends are likely to continue.
UK Lamb Kill Only 1% Higher in August
Although lower than expected, the UK lamb kill for the month of August was still ahead of the previous year. At 1.07 million head, lamb slaughterings for the month were up 1% on the year. In addition to more lambs being slaughtered, they were also heavier, with average weights up 2% (0.4kg) year on year to 19.1kg. This has come as improved feed availability, coupled with generally good weather, has allowed producers to easily add weight to their stock. Overall sheep meat production was up 1% on the year, at 24,600 tonnes, as fewer adult sheep were killed; lamb production was 3% higher on the year at 20,400 tonnes.
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