Buoyant outlook for beef prices
Buoyant prices for beef producers seem set to continue, as the UK and EU market face further contractions in the supply base.
According to EBLEX economics manager Mark Topliff, the UK beef herd is set to drop another 2.6% in the next two years, while the dairy herd, which currently contributes half the UK’s beef supply, will shrink 3.8%.
“Dairy sector prospects are not good and this will hit the breeding herd,” he told the recent EBLEX/BPEX Outlook 2009 conference. Lack of confidence in the suckler cow sector was also making producers reluctant to retain cow numbers.
As a result, domestic beef production is set to fall from 863,000t in 2008 to just 805,000t in 2010.
Mr Topliff pointed in particular to the high numbers of heifers that were being sent to slaughter. EBLEX data showed that, in 2008, over 37% of the prime beef slaughterings were heifers, compared with 33% in 2005.
“Producers are cashing in on the high price of beef available now,” he said. “It may be that they are just holding their older cows for another year to see what the market looks like then, but it is worrying.”
Despite some weakening of demand in response to the credit crunch, Mr Topliff said that prospects remained good. This was reflected in the high price that people were paying for store cattle. Yearling Continental crosses were fetching over £650 a head compared with £550 a year ago. “People presumably reckon they can make a profit at these prices.”
This positive outlook was reinforced by Bord Bia economist Padraig Brennan. He pointed to the tighter global supply of beef, with Brazilian production down 10% in 2008 and set for another 2% fall this year. The number of Brazilian farms approved to export to the EU would also be restricted, possibly reaching 2000 by the end of 2009.
EU beef production would also show a small downturn this year, with reduced prime beef supplies slightly exceeding the increase in cow beef derived from the contracting dairy sector.
Mr Brennan expected to see some increase in Irish beef supplies, due to lower weanling exports in 2007 and 2008. This would increase export availability, with the UK the main market.
Overall, the EU market was expected to remain some 200,000t in deficit in 2009 which, combined with the slow recovery in imports, would underpin prices.
- For more on the EBLEX/BPEX Outlook conference, see Phil Clarke’s Business Blog
