During
February, prime cattle prices continued to set new record high levels
at Scottish abattoirs according to the latest market commentary from
Quality Meat Scotland (QMS).
Latest
figures from the industry body reveal R4L steers reached 489.2p/kg dwt
in the week ending February 25th, an increase of 18.5% over the same
week last year and of 30% compared to the five-year average.
Iain Macdonald, QMS Market Intelligence Manager,
explained: “It is unusual for market prices to be rising at this time
of year. Indeed, between 2010 and 2022, R4L steer prices were lower in
the eighth week of the year than in the first week of the year on 10 of
13 occasions. In addition, only in 2012 was the price at its highest of
the year so far in week eight. Over the 13 previous years, there was
an average reduction of 1.5% for the period but this year prices jumped
6% higher.
“In
Scotland, prime cattle prices have been rising despite weekly prime
cattle slaughter being seasonally firm, running above its 2022 weekly
average level, with spring-born cattle from 2021 reaching peak slaughter
age.”
The
latest cattle population data from BCMS revealed a significant
year-on-year reduction in slaughter-age cattle on Scottish farms for
January 2023. The combined number of beef-sired cattle and dairy-sired
males on Scottish holdings aged 12-29 months was down by 3.3% on a year
earlier, driven by an increased outflow of store cattle to England since
autumn 2021.
By
contrast, at GB level, the BCMS data points to a continuing
year-on-year increase in prime cattle availability as 2023 began. Across
the 12-29-month age group, numbers were 2.7% higher than at the
beginning of 2022, although lighter carcase weights mean that an
abattoir aiming to produce the same volume of beef as last year will
need to compete for more prime cattle.
Iain continued:
“While Scottish abattoirs will currently be drawing from a large group
of cattle aged just under two years old, age at slaughter tends to be
older and more varied at GB level during the first quarter and last
summer’s drought may have slowed finishing periods south of the border.
“Then
again, it should be noted that total UK beef production has been rising
significantly on a year earlier since October 2022 once an increased
cow kill has been factored in. This uplift in cow beef production has
not prevented cow prices from reaching record highs, or from cow prices
holding much closer to prime cattle prices than usual, with
manufacturing grade beef in strong demand.
“Though,
in the calendar year of 2022, the volume of beef added to the UK market
still fell by 1%, following on from a 2% reduction in 2021, so this
rebound in supply in the final quarter is likely to have been
insufficient to replenish tight market supplies.”
To
add to this, the UK market is facing external price shocks from the EU
and global beef market, where a tight balance between supply and demand
has been forcing up prices. In the final quarter of 2022, the average
price per tonne of UK beef exported was up nearly 22% year-on-year while
imports to the UK were priced 10% higher than in late 2021.
As
well as prime cattle availability, the BCMS cattle population figures
can also provide an indication of changes in the breeding herd. At the
beginning of 2023, the number of beef-sired females aged 30 months and
over on Scottish farms was 3.3% lower than a year earlier, signalling an
acceleration of the year-on-year decline from the 1.6% reduction at the
beginning of October 2022.
As
well as increased cow slaughter in the second half of the year, there
was an 8% year-on-year reduction in beef-sired females aged 24-29 months
on farm in Scotland in October 2022, meaning that there were fewer
replacements available to add to the herd.
Across
England & Wales, the breeding herd was also down significantly on a
year earlier in January, with a 2.8% reduction in beef-sired females
aged 30 months and over. While declining slightly slower over the past
year, the beef herd has reduced at a faster pace in England & Wales
than in Scotland over a longer horizon. Indeed, relative to the start
of 2018, the number of beef-sired females aged 30 months and over on
farm in Scotland was down by 7.9% compared to a fall of 10.7% across
England & Wales.
Iain added:
“This steeper contraction in the suckler herd in recent years in
England & Wales is likely to have been supporting the demand for
Scottish-born store cattle, especially given that the beef herd
accounted for a much smaller 43% of the total breeding cow herd in
England & Wales at the beginning of 2023 compared to almost 73% in
Scotland.”
In
2022 the number of cattle aged under 30 months moving from farms in
Scotland to farms in England & Wales rose by 35% on 2021 and by 42%
above the five-year average. While the pace of increase slowed in the
second half of the year, this partly reflected a higher base from autumn
2021 to compare against, and the outflow would still be enough to
reduce the prime cattle kill in Scotland by around 2% in the first half
of 2023 compared to a scenario of unchanged moves.
Iain concluded:
“This helps explain why prime cattle availability in Scotland is set to
remain tight in the first half of 2023 despite increased calf
registrations in 2021. In 2022, total registrations were only down
marginally from 2021 and while this could, in theory, see prime cattle
availability begin to level-off in 2024, BCMS data shows that this pool
of cattle has already been affected by the increased store cattle
outflow last autumn. At the same time, demand for Scottish store cattle
from English buyers is reported to have held firm in 2023.
“Looking
further ahead, the decline in the breeding herd seen in 2022 is likely
to have an impact on calf registrations in spring 2023, with its peak
impact on prime cattle availability then occurring in the first quarter
of 2025 when these calves reach peak slaughter age at just under two
years old. However, a reduced breeding herd across GB means that store
cattle availability is set to tighten further in autumn 2023 and spring
2024.”