Beef prices set to stay firm throughout 2010

Beef markets are expected to remain “firm and stable” during 2010, according to the latest market outlook from industry levy body, EBLEX.

“Annual declines of more than 2% in the national beef and dairy herds recorded in the June Agricultural Survey are expected to continue over the coming year,” it suggests. “Coupled with relatively stable imports, exports and domestic consumption, this is forecast to leave the national beef market in a very similar balance to the past 12 months.”

Actual beef production in 2009 was 2.5% higher than expected, due to higher than anticipated heifer and young bull slaughterings. However, this was accompanied by somewhat lower import and higher export levels. As a result, finished cattle prices remained firm and stable, despite the inevitable weakening in consumer demand due to the recession.

BCMS calf registrations indicate more dairy-bred bull calves being reared over the past 18 months, so young bull slaughterings are expected to increase still further in 2010,” predicted EBLEX senior economic analyst Mark Topliff. “This is almost certain to be more than offset by declining beef-bred steer and heifer numbers, though, resulting in slaughterings back by around 1% on 2009.”

The changing slaughter mix, a more typical growing season and an expected increase in feed prices later in the year are assumed to keep a lid on carcass weights. At the same time, cow and adult bull slaughterings for the food chain are likely to continue declining. Overall, therefore, total beef and veal supplies are forecast to fall by a similar amount to prime beef slaughterings.

“The fall in consumer demand for beef is estimated to have reduced imports – mainly from Ireland and Brazil – by around 8% in 2009,” said Mr Topliff. “With sterling not expected to strengthen significantly against the euro, domestic supplies are likely to continue to be favoured by the market, although some slight increase in imports may be on the cards to fill any gap left by declining levels of UK production.”

The weak pound has also continued to help exports over the past year and, with the support of increased EBLEX export marketing activity, this is forecast to be maintained over 2010. While comparatively high cow prices could limit exports of cull cows, there has been an encouraging increase in levels of prime beef being shipped abroad.