Beef prices to stay firm in 2009

Prospects for beef producers in 2009 continue to look positive, despite the recession, according to the latest Market Outlook from EBLEX.

Forecasts from the industry body suggest that prime cattle slaughterings will fall below 2m head in the UK for the first time ever this year as both the dairy herd and suckler herd continue to contract. Cow slaughterings are also expected to drop off slightly from last year’s peak of 560,000 head.

“Some recovery in average carcass weights is expected as a result of better grass-growing conditions and lower feed costs,” said EBLEX economics manager Mark Topliff. “Even so, overall UK beef and veal supplies are expected to fall back to around the 850,000t level of 2006.”

With no prospect of Brazilian beef returning to the European market in any significant quantity for at least the first half of the year, imports are forecast to remain at a similar level to last year – and in a mix that exerts less downward pressure on the market.

And the continued weakness of sterling against the euro will enable UK exports to grow still further in 2009, to about 90,000t.

The one negative is the likely effect of recession on demand. “Although domestic beef consumption seems certain to be negatively affected by the recession, a continued growth in mince sales is forecast to help offset declining demand for steak and roasting joints,” said Mr Topliff.

As a result, annual consumption in the coming year is expected to stay comfortably above the 1m tonne mark.

Weighing up these market fundamentals, Mr Topliff believes prices will stay in line with the 2008 average of 260p/kg dw, which itself was 26% up on 2007. “Prices have held up well so far in 2009 and, so long as the supply:demand balance remains, they should stay reasonably firm.”