Coronavirus: Analysis shows differing impacts on global beef market

British beef farmers have had a less bumpy ride than some of their counterparts in the rest of the world as a result of the Covid-19 outbreak, according to analysis by Quality Meat Scotland (QMS).

The research, by Iain Macdonald, QMS senior economics analyst, shows that while the outbreak has been a global pandemic, it has had different impacts across the global beef market.

Countries such as Ireland – which accounts for the majority of beef imports to the UK – Italy and Spain are yet to see prices get back to their pre-lockdown levels.

See also: Read more from Farmers Weekly on markets and trends

Farmgate prices have also fallen in the US, with reduced slaughter capacity in April and May leading to high beef volumes in June, as processors sought to clear a backlog of cattle waiting to be processed.

Scottish picture

Prime cattle prices fell by 3% between the end of March and the beginning of May, while slaughter numbers declined by 3.4% year-on-year through April at Scottish abattoirs.

However, in May, retail demand surged for higher-value cuts again, helped by industry marketing campaigns and warm weather.

As a consequence, farmgate prices began to climb and by mid-June had reached their highest level since 2018.

“Moving into July, though starting to stabilise, R4L steers were priced 12.4% higher than in the first week of May at 384p/kg deadweight,” said Mr Macdonald.

Slaughter numbers were 4% higher year-on-year at price reporting abattoirs in the four weeks to 4 July.

Irish situation

This picture contrasts with Ireland, which saw steer prices slump 8% in mid-April and slaughter numbers decline in response to weak demand.

At their lowest point, between mid-April and mid-May, slaughter numbers were 15% down on the previous year.

Production has now risen to above 2019 levels, but prices are still 2% lower than mid-March, at a time when Irish prices are traditionally towards their highest of the year.

Over recent weeks, Irish beef has been about 17% cheaper than Scottish beef, compared to a 5% discount at the same time in 2019.

The average discount during May and June has been 8% over the past five years, typically rising to 16-17% in the autumn, when Irish farmgate prices tend to be at their lowest.

Mr Macdonald told Farmers Weekly that Irish beef prices had been more sensitive to changes in demand from the UK and European foodservice sector because it is such a large exporter.

“Retailers tend to favour the domestic product at retail level, so a lot of their product [Ireland’s] will be going into foodservice.”

Although Irish beef was looking cheaper than it normally would compared with domestic product, retailers seemed keen to continue to promote Scottish and British beef, and with UK slaughter numbers expected to tighten later this year, British prices could be supported.

“Although given the economic challenges, they [retailers] may also want to have a lower price range as some consumers will be really price sensitive as their income is dropping.

“There are many factors and it is difficult to predict how things are going to play out as it is such an unprecedented scenario.”

The rest of Europe saw male prime cattle prices fall by an average of 6% between mid-March and the end of April.

At the start of July, prices were still 4.5% below mid-March levels, with prices in Italy and Spain currently 9% lower than in mid-March.

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