Archive Article: 2002/03/22
By Duncan Sinclair,
MLC chief economist
WITH foot-and-mouth behind us, we are looking for more "normality" to return to the beef market this spring.
Prime cattle supplies are set to fall again in 2002, due to F&M and the underlying decline in the beef and dairy breeding herds. If carcass weights return to their long-term trend, the MLC sees domestic production falling by a further 10% (on top of the 8% year-on-year fall seen in 2001) to just 585,000t. With consumption strengthening slightly to 935,000t, this could mean imports rising to a level of nearly 40%.
But what of the immediate spring market prospects? Stronger prices in the first two months of the year have encouraged greater numbers of cattle forward. And a shortage of straw in some areas is also bringing more stock onto the market.
Combined with the knock-on effects of F&M, this could well lead to a tighter supply situation through the spring and early summer, resulting in firmer, more stable prices.
Against this, however, must be balanced the effects of the drift to spring calving in the suckler herd, evident through BCMS figures. This will result in higher numbers of 12-14-month-old suckler bulls from the 2001 crop, and 24-month-old heifers from the previous year, coming to market in the April to June period, which may well dampen the traditional seasonal price lift.
Of more immediate concern for price prospects is the fate of the EU Special Purchase Scheme for beef – the continental equivalent of the UKs over-30-month-scheme. The 40,000t extension to this scheme has been used up and, if it isnt extended again, the EU beef market will have to absorb an extra 7000t of cow beef a week.