Raised beef supply forecasts darken price gloom

Beef prices face fiercer pressure from strong supplies than first thought, according to new forecasts.

AHDB Beef & Lamb has revised up its estimates for UK prime cattle and cow production from earlier in the year.

Beef and veal output could hit 909,000t in 2016, up 3% on the year. In February the levy board predicted a 2% rise to 902,000t.

The prime cattle kill is still expected to jump 2% to 1.96m.

See also: Beef spec changes and price drop sees stand-off

But adult cattle slaughterings could reach 670,000, compared with earlier estimates of 635,000.

British exports could rise in line with production, as the weaker pound helps UK meat trade on the continent, especially in the commodity cow beef market.

But any benefit will be squashed by higher imports, which are linked to improved cattle numbers in Ireland.

AHDB market intelligence senior analyst Debbie Butcher said ongoing profitability problems in beef and the current dairy crisis would bring more cows forward.

“Increased slaughterings of both prime and adult cattle are expected to be mitigated by lower carcass weights, as finishers respond to the processor and retailer focus on specification,” said Ms Butcher. “However, beef and veal production is still forecast to be up.”

Healthy supplies have been one factor behind the slump in cattle prices since the start of the year.

The British all-steers deadweight average fell from 335.5p/kg in the week ending 2 January to 310.8p/kg in the week to 30 April. Prices perked up last week, as they recovered to 312.2p/kg, perhaps marking the start of summer barbecue demand. But they remain way down on 2015 levels.

The trade figures are not yet following the forecast trend: UK beef imports were down 5% on the year in February, and exports dropped 3%, after a much better January performance.

Looking further ahead, AHDB suggest the prime cattle kill could top two million head in 2017.

But lower carcass weights could have an impact again, as total production drops 2.5% to 886,000t.

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