JULY 2015
July 2016
July 2016
Beef
UK – The GB all prime average strengthened another 2p on the week earlier, to average 321.0p/kg.
Reports suggest that competition for livestock from processors is still robust. The average R4L steer and
heifer values both moved up another penny on the week at 333.3p/kg and 333.0p/kg respectively. R3
young bulls moved up 2p to 321.0p/kg.
This move demonstrates that the market is currently settled in favour of the producers. The all prime
average has strengthened by 11p/kg in the past six weeks and has resulted in prices moving closer to last
year’s position. In the latest week, however, this time last year prices were just on the cusp of their sharp
upwards trend, a development which lasted for a number of weeks. In the short term, indications are that
processors are likely to be more careful in the coming weeks. Unless demand performs better than
expected, any upwards pressure on price may well be more subdued compared with that of July last year.
VL’s have also become very tight, many packers are finding their frozen stocks have become depleted
and therefore have the ability to be bullish on their fresh sales as the pressure to sell has reduced.
Australia – Australian cattle supplies remain tight and prices strong. Australian cattle prices are expected
to remain strong through Q3, given ongoing tight cattle supplies. Buoyed by recent rains, cattle prices have
again risen to record levels in June.
Argentina – Beef exports have reduced 3.5% however prices have stayed firm throughout June and have
mirrored the level we saw at this time in 2015 and 2014
Uruguay – Slaughter number surpassed the 50k mark for the first time in 2016 last week. Live cattle
exports have equalled a historic high with demand from Turkey continuing to increase (currently 88% of
all live cattle exports). There has been a gradual increase in finished cattle prices throughout June and is
likely to continue throughout July and into August.
Brazil – Slowing economic conditions will continue to support increased Brazilian beef exports. Exports to
China, which reopened in June 2015, totaled more than 70,000 tons from January to May, while exports
to Saudi Arabia, another new market, are more than 11,000 tons in the first five months of 2016. This is
proof that there is stiff competition for the UK for Brazilian raw material.
China – China’s slowing economy is affecting general beef consumption, but higher and middle-income
earners are supporting continued imports as they continue to seek quality beef products. Beef prices will
remain stable in the coming quarter, as supply and demand are likely to be balanced.
USA – US market volatility continues to be a market disrupter. The combination of marked week-to-week
price volatility, and equal volatility in the futures market, has made trading conditions difficult to predict.
Prices have firmed
July 2016
Europe – Europe is the most stable beef production region right now, with prices strengthening slightly,
supported by steady exports, in particular to Turkey, despite ample availability of beef and low prices of
competitive proteins. Also, it has been confirmed that Ireland have been given the green for the export of
live cattle into Turkey. Primarily the focus will be towards animals under 1 year old and 300kgs.
Lamb
The liveweight lamb trade has declined in recent weeks as the new season continues to pick up. In the
week ended 25 June, prices reduced by 10p on the level from four weeks previously. However, prices had
risen in the previous week. This left prices 24p/kg higher than the same week in 2015, following sharper
falls in the same period last year. Price falls may have been linked to a drop in demand as supplies remain
tighter than this time last year. Numbers of lambs coming to liveweight markets in GB have remained lower
on the year.
Deadweight lamb prices have seen similar falls to those seen in the liveweight markets. In week ended 25
June, the season prices averaged 397.9p/kg, having fallen by 5p over the past month. However, at this
level, the deadweight SQQ was also above its level in the same week last year.
Pork
Reduced kill numbers (Dutch down 20%, Germany and Denmark down 20%) on the continent have
created turmoil in both the primal and manufacturing cuts. Lack of availability has forced prices skyward.
However even though prices have increased considerably, prices levels are still at a historic low. Leg
prices have increased by £0.10 - £0.15 per kilo (50p higher than 6 months ago) and backs have also risen
by a similar level.
Poultry
Broiler slaughter numbers have remained consistent within the UK in recent
month consistently averaging around 18 million birds per week with average
live weights dropping slightly to 2.2kgs (-1.1% YoY). In recent weeks the prices
for poultry meat has increased significantly due to the weakening of the £. The
UK bird became better value almost overnight and domestic retailers and
further processors will look to increase order from UK suppliers if prices on the
continent continue to rise.
July 2016
Currency
In the wake of the result of the EU referendum, what are the short-term consequences for the UK meat
sector? Though this decision will have widespread effects on the meat industry in the long term, much will
depend on the terms of the UK’s exit. Full details will be unclear until negotiations are concluded. In the
meantime, the UK will remain a part of the EU and will continue to be bound by the existing conditions of
our membership.
Once the result of the referendum was clear, one of the first effects was seen in UK currency. The value
of the pound fell sharply against the US dollar and the euro, as well as a number of other currencies, during
the day after the result. Further falls were seen at the beginning of this week, as uncertainties continued.
As of 29 June, £1 bought €1.21, down 10 cents since immediately before the referendum result and the
lowest level in over two years. Against the US dollar, the pound hit its lowest level since 1985, at £1 =
$1.32 and it was also at a three-year low against the New Zealand dollar.