Prime cattle prices remain high, and still significantly higher than the 5-year average. With numbers remaining tight
estimated prime cattle slaughter at GB abattoirs stood at 30,100 head, down 11% on the previous week and down 7% compared to the same week last year. Although favourable for producers, such high prices make things further along the supply chain a challenge.
With Hospitality partially open, warmer weather and retailers starting the BBQ ranges demand trim due to strong burger sales has increased significantly resulting in a large increase for these products. With demand being so high other cuts are being placed into the trim which is influencing the pricing for the rest of the animal. Steak cuts which were already higher than they have been for over a year continue marching upwards with some producers rationing supply.
The UK imported 15,900 tonnes of fresh and frozen beef in March, down 34% (8,000 tonnes) compared to the same month a year ago. A total of 5,500 tonnes of fresh and frozen beef was exported in March, 55% less than the same month a year ago.
Irish beef exports during Q1 2021 were down 22% year on year, totalling 105,400 tonnes. Within that, less beef was exported to GB with export volumes for the quarter back 38%, a reduction of 18,200 tonnes.
Many countries around the world are currently experiencing high prices for cattle or beef, driven by a combination of local and international factors, namely tighter supplies, and high export demand.
Argentina has recently imposed a 30-day ban on beef exports to try and tackle rising domestic prices, largely driven by high Asian (Chinese) demand. This could further limit global supplies, with more products potentially drawn into China from elsewhere to compensate. Argentina is China’s second-largest supplier of beef behind Brazil.
Brazil with lower supplies and robust export demand has contributed to notable price inflation in cattle prices, with deadweight steer prices in the first week of May over 70% higher year-on-year in US dollar terms.
Brazilian cattle kill is currently below last year’s levels, with a total kill for the first quarter of 2021 down 12% year-on-year, Irregular rainfall in 2020 hampered grass growth and pasture quality, which has subsequently delayed cattle finishing.
Robust export demand from China is helping support Brazilian prices; shipments grew by 31% year-on-year during the first quarter of 2021.
Australia is reportedly hosting its smallest cattle inventory for over 30 years, due to drought and subsequent de-stocking. Following more favourable conditions in 2020, many producers are now replenishing their herds, causing increased competition for available supplies, and driving up cattle prices. A lower inventory has also contributed to Australian beef exports for Jan-Mar 2021 falling 22% year-on-year.
Europe although not a major export in global terms, supplies in Europe are also tighter than in previous years, linked with declining numbers of dairy and suckler cows. This will have supported generally firmer European cattle prices; the EU average R3 steer price was up 12% year-on-year in the third week of May 2021.
The United States has seen price strength from the other side. US wholesale beef prices have increased notably over the last few weeks, driven by increased demand from retail, reopening foodservice and export growth (mostly to China). In April, average wholesale beef prices were 5% higher year-on-year, and up 19% when compared to 2019 (pre-Covid).
Chinese protein demand continues to influence global beef markets. China’s beef prices have been steadily rising for some time, initially driven by ASF (African Swine Flu), which reduced pork production and led to consumers turning to other proteins. COVID-19 then caused disruption to meat processing, but beef demand remained robust, adding further demand for imports. In 2020, Chinese imports of fresh and frozen beef rose by 28% year-on-year, rising by a further 20% year-on-year during the first quarter of 2021.
Beef pricing whether local or global looks set to remain high.