UK Meat Market Report – October 2021

This month’s meat market report has a wealth of information on how market demands are affecting pricing, including news on turkeys with Christmas on the way.

Beef

GB prime cattle prices are rising slowly, whilst prime cattle slaughter estimates are down. This means a move towards more “value” cuts would make economic sense to consider when designing new menu’s.

With Autumn on the way and the weather getting colder, soups and casseroles will start making more appearances on menus. Using diced beef chuck can be an effective option when cooking a good, warm beef stew.

Chuck is a primal cut, mainly deriving from the shoulder section of the cow. This cut is loaded with lots of flavour making it a great choice for slow-cooked stews.

UK Beef Industry Pricing

On 1st July, there were 7.98 million cattle on the ground in the UK, 62,800 head fewer than the same point a year ago. This maintains
the trend seen in GB cattle numbers over the past 3 years, being the 15th consecutive set of quarterly figures that show a year-on-year decline.

GB prime cattle prices look likely to slowly rise again, the GB all-prime average deadweight cattle price moved up another 0.5p with the weekly average at 410.4p/kg.

Looking at the average price, overall, the movement was more mixed. The average steer price saw the largest growth of 0.7p, with the heifer price edging up 0.3p on the week before. Young bulls performed less well, with the overall price falling 2.2p on the previous week.

Slaughter of prime cattle at GB abattoirs was estimated to be 27,500 head for the week, this is down 9% on the week before and down 2% on the year. Continued tighter cattle numbers and potential harvest operations will have contributed to lower throughputs.

The overall average GB deadweight cow price, slipped by a further 1.3p on the week to an average 289.6p/kg. Despite this, the measure was still 37p above the price recorded for the same week a year ago. Animals of O4L spec lost 3.3p to average 309.0p/kg.

Cull throughputs in GB were estimated to be 9,300 head for the week, down 16% on the week before and down 9% year-on-year.

Beef pricing is expected to remain firm.

Lamb

Lamb has been under pressure due to a decline in slaughtering, whilst freight costs remain high. There’s also a decline in the production of sheep meat from New Zealand and Australia, meaning prices remain higher than in the same period last year.

UK Lamb Industry Pricing Detail

Liveweight prices have been under pressure this week. There was a noticeable uplift in numbers coming forward. Lamb throughputs for the week stood at 129,500. Heads and prices remain 24p higher than the same period last year. Making it 56p higher than the five-year average.

The GB deadweight NSL SQQ declined 1.4p, the quote remains over 70p above year-earlier levels, slaughtering’s at 220,000, which is down 10% on the week and a whopping 27% on the same period last year.

Some industry reports suggest supermarkets are reluctant to push lamb in a bid to ensure their profit margin remains consistent. This is likely to bring pressure to the market. Whilst freight costs remain high, import levels are limited.

The import of sheep meat has been under pressure for some time. Production in New Zealand and Australia have been low compared to historic values.

As global shipping costs remain high, there is also the issue of container availability and with recent demand from Asia rising, there’s no reason to presume a sharp divergence from recent and current levels.

Imports add to balancing the demand in the UK, both in terms of cuts preferred by UK consumers, and the seasonality of supply.

Longer-term volumes need to stabilise for the UK’s continued need for imports to meet the balance against domestic production. This year import volumes are expected to drop by 13%, to 58,000 tonnes. On the export side, the UK shipped in 4,200 tonnes of fresh and frozen sheep meat in June. This is 5% less than a year ago and 12% lower than May.

Volumes from New Zealand are 16% lower, year-on-year, standing at 2,800 tonnes. For the Year-to-date UK sheep meat imports totalled 27,700 tonnes, down 17% on the same period last year.

Future price Indications around imports from New Zealand & Australia remain high, leading to some importers becoming reluctant to purchase the meat at such high price levels.

Lamb pricing is expected to remain firm.

Pork

GB finished pig prices are lower than last year. Production costs however remain high, primarily caused by rising feed costs combined with increased labour costs, compared to the first quarter of 2021.

UK Pork Industry Pricing Detail

The EU-spec SPP slipped slightly but is still 5.69p above the five-year average.

Estimated slaughter of finished pigs at GB abattoirs totalled 158,300 head for the week, 1% lower than the week before and 13% below the same week a year ago.

Pig carcases weighed 88.40kg on average for the week, 1.19kg heavier than the week before, and 3.20kg heavier compared to a year ago. These figures support the reports of continued backlog issues in the supply chain, with labour issues impacting the required abattoir throughput.

The price increase primarily reflects rising feed costs, as elevated global cereal and oilseed prices affect the cost of pig feed. However, both the labour and fixed costs have also increased compared to the first quarter of 2021.

Pig prices have also increased compared to the start of the year. The APP averaged 154p/ kg in Q2, 9p/kg which is more than during the first quarter. However, compared to last year, prices are 13p/kg lower. This means that, on average, pig producers remain in a significant loss-making situation. Estimated net margins stand at -28p/kg (or -£24/head) in Q2 2021, a similar situation to the first quarter.

The first half of 2021 represents the worst financial situation on record for pig producers, over a six-month period. It’s typical for pig production to go through cycles of profitability and then loss-making, but it’s unusual for margins to be this low for such a prolonged period.

The pork market seems to be settling, yet the main challenge of how quickly farmers can get pigs from the farms and into the supply chain remains. Carcass weights are rising due to a high volume of pigs remaining on farms, inevitably adding pressure on pricing at the heavier weights.

Pork pricing looks to remain firm.

Poultry – Get your Christmas turkey early

The UK chicken market remains under pressure with high demand, short availability and retail taking priority over food service.

Well documented supply issues for KFC, Nando’s, and more recently Greggs have put the poultry issues firmly in headline news. The issues facing the industry will continue until the shortage of labour is addressed and the gaps are filled across all levels of the supply chain.

The mainstream news is full of the current situation which is affecting so many parts of the supply chain. Even the supermarket shelves are suffering. This raises bigger concerns, considering this sector comes first when it comes to access to the supply chain before anyone else.

Turkey is also in the news, warning of shortages at Christmas due to lack of labour and limited stocks, turkey prices look to become expensive, just in time for Christmas.

Poultry prices look to remain firm with turkey prices increasing.