Category: Dairy & Livestock

Beef

The beef farmgate price continues to break records.  The GB All-Steer deadweight price for the week ending 19th April broke the £7 per kg barrier for the first time, reaching £7.07 per kg.  This is 144.5p per kg more than at the turn of the year and a staggering 217.67p per kg higher than for the same week in 2024 (nearly +44%).

Prices have been supported by strong demand and tight supplies.  Latest data from Defra for the first three months of 2025 show UK beef production totalled 224,800 tonnes, a decline of 8,100 tonnes (-3.5%) compared with Q1 2024.  The fall in production was due to slaughter numbers and carcase weights.  Clean cattle kill numbers totalled 508,000 head for January to March down by 14,000 head (-2.6%) compared with the first three months of 2024.  Furthermore, carcase weights were also 1.5kg lighter than year earlier levels.  The latter doesn’t quite align with the theory that some are holding on to cattle to achieve heavier weights and banking on the price continuing to rise.  Perhaps some are actually ‘cashing in’ a bit earleir than normal, not wanting to bet on the price continuing to increase.  In addition, cull cow slaughter numbers are also lower for the same period, down by 6,000 head (-4%) to total 155,000 head.

Looking ahead, BCMS data suggests domestic supplies are likely to remain constrained, which should help to support farmgate prices.  Furthermore, the average EU deadweight cattle price has risen even faster than the GB price over recent weeks.  This has reduced the price differential between GB steers (R3) and EU steers to 94.8p per kg in the week ending 31st March, down from 117.4p per kg in mid-February.  The increase in the average EU steer price has predominantly been driven by gains for Irish beef.  GB and Irish beef prices are closely aligned and our price has supported the Irish beef price, where supplies have been good so far this year, but are forecast to reduce as we go through the year.  Indeed, supplies across the EU are expected to remain tight adding further support to prices.  An area to watch though could be if the EU-Mercosur trade deal is ratified (see https://abcbooks.co.uk/eu-mercosur-trade-deal-negotiation/) which could see increased imports of cheaper beef from Brazil, Argentina and Uruguay coming into the EU, although this could be curtailed by the EU Deforestation Regulation (https://abcbooks.co.uk/eu-deforestation-reg-delay/)

Sheep

Farmgate prices for clean sheep, although still historically strong, have not reached the dizzy heights of last year.  The GB OSL SQQ price for  the week ending 19th April fell, for the 5th consecutive week, by -7.5p per kg on the week to average 702.9p per kg.  This is 157.6p per kg lower than for the same week in 2024.  In contrast to beef, consumer demand has been weaker this year.  In 2024 there was an alignment of religious festivals prompting strong supermarket promotions.

In terms of production, during the first quarter of 2025, latest data from Defra shows it fell by 4.5% (3,100t) to total 65,600 tonnes, compared to year-earlier levels.  Clean sheep kill for the period January to March totalled 2.77m head, down 111,000 head (3.8%) compared with Q1 2024.  Adult sheep were -12.8% lower, totalling 317,000 head over the same period.  Carcase weights have remained pretty stable averaging 20.6kg.  There had been a little uptick in carcase weights over the last couple of weeks, perhaps due to some vendors retaining lambs a little longer in the hope the trade would rise around Easter.  As numbers of New Season Lambs (NSL) coming forward each week start to rise, OSL prices are not likely to see much of an increase, if any, now.  Previously AHDB had been forecasting a large carryover from 2024, with numbers down on the year so far, it remains to be seen if these materialise; will some be kept for the breeding flock?

The UK dairy sector is experiencing a surge in output.  Latest figures from Defra show UK milk production for March 2025 totalled 1,373m litres; a 16% increase on February.  This means the milk year (April-March) finished above 15 billion litres at 15.12 billion litres, for only the second time in the last 10 years.  The previous year being 2020/21.  Production has got off to a flying start for 2025/26 as well.  Strong farmgate prices and a dry spring, meaning early turnout, has supported increased volumes which are forecast to continue through the summer and autumn.  A limiting factor may come from the contraction in the herd size.  BCMS data for dairy registrations in Q4 2024 were the lowest on record.  The prevalence of Bluetongue Virus (BTV) on the continent is also affecting replacement stocks (i.e. imported heifers).  Furthermore, milk production in the Netherlands, Germany and France has been affected by the disease which is expected to become more prevalent in the UK as we head into midge season – this could adversely affect production.  However, the AHDB is still forecasting a 1.2% increase in GB volumes for the 2025/26 and a 0.6% growth globally.

In terms of prices, UK wholesale markets remain at very high levels.  There has been some easing over the first quarter of the year but whilst milk supplies have been strong in the UK and Ireland, this has not been the case on the continent due to BTV.  Globally, the GDT average price index has performed well in April, up by 1.1% at the first event and then by a further 1.6% at the latest auction, to average $4,385 compared with $3,590 in April 2024.  The latest Defra UK farmgate milk price for March was 46.01p per litre compared with 38.46p per litre in March 2024.  Price announcements for April showed a fairly stable market, particularly for liquid contracts; for cheese and manufacturing, prices started to ease a little for some.  However for May, Barbers (cheese) has announced no change to its price, but Freshways (liquid) is reducing its price by 2p per litre.  Furthermore, the spot price has plummeted as farmers were forced to dump milk following a major breakdown at the Yew Tree Dairy, Skelmersdale processing plant, which halted milk collection for more than a week.

According to the AHDB, pigmeat production for the first three months of 2025 has out-performed its forecast.  In the quarter January to March, UK pigmeat production totalled 244,500 tonnes, up 6.4% (nearly 15,000 tonnes) compared with the same quarter in 2024.  However, Q1 2024 volumes were the lowest since 2017.  Compared with Q4 2024, volumes have fallen by 5,000 tonnes – but this is usual following the Christmas peak in demand.  The increase in production has been driven both by slaughter numbers and carcase weights.  The UK clean pig kill totalled 2.59m head for the first three months of the year, an increase of 5.5% (almost 136,000 head) year-on-year.  The average dressed carcase weight for the same quarter was 91.5kg; 1kg heavier than year-earlier weights and nearly 2kg more compared with the previous quarter.  Again, this is not unusual for the time of the year as pigs are often brought forward earlier to catch the Christmas trade and can therefore be a little smaller.

In terms of pricing, the GB SPP (EU Spec) has been steadily increasing since the second week in March, after a disappointing start to the year; it stood at 205.6p per kg for the week ending 19th April.  This is still 1.6p per kg less than for the same week in 2024, but the gap has reduced since the turn of the year when it was about 6.6p per kg lower.  Recently prices on the Continent have been rising faster than the domestic price which should help to support values, but with a lot of GB pigs now produced on ‘cost of production plus’ contracts domestic prices are slower to react to movements on the Continent.

 

The NFU has produced a Ten-Year Vision for the British Beef Industry.  This sets out a number of actions designed to boost production by 5% by 2035.  These include – an improved Livestock Information System (LIS), support for more carbon audits in the sector, a standardisation of audits, a shift away from the sole use of GWP100 to measure emissions, progress on disease eradication (especially bTB and BVD), better supply chain transparency, an improved carcass classification system, support for small abattoirs, streamlining of farm assurance, reduced barriers to trade with the EU and protection on standards within future trade deals.  The full vision can be found at – https://www.nfuonline.com/updates-and-information/nfu-livestock-board-beef-vision-for-2035/ .

 

Prices

The GDT Price Index has seen little movement during March.  At the first event in the month the average index fell by -0.5% with no change observed at the event held later in the month, resulting in the index finishing March at $4,245 per tonne.  This compares with $3,497 in March 2024.  Domestic farmgate prices are holding well as we head towards the seasonal flush – most milk buyers have left prices unchanged for March and April.

Production

As we near the end of the milk year, AHDB estimates GB total production to date (April – February) is 0.9% above last year at 11,331 million litres (Defra’s UK figures will be available shortly).  From September 2024 onwards, production has been ahead of year-earlier deliveries.  Increases in the farmgate price and lower feed costs have encouraged growth in production and this has been achieved with a declining milking herd.

Dairy Herd Numbers

As at 1st January 2025, BCMS figures record the GB milking herd at 1.62m head.  This is the lowest figure recorded for the month of January and a 0.9% decline on January 2024.  Perhaps most worryingly is the decline in youngstock numbers.  These are animals (mainly heifers), less than 2 year’s old.  BCMS data shows the greatest year-on-year change for this group, down 22,000 head and this could see fewer heifers available for replacements into the milking herd.  The data also shows the herd is getting younger, probably due to keepers taking advantage of the strong cull price.

A High Court ruling means chicken manure must be classified as industrial waste under the Waste Framework Directive.  The ruling came after the NFU challenged waste rules set by Herefordshire Council.  The NFU argued poultry manure should be treated as an agricultural by-product, not as waste under the Directive.  The ruling means new chicken units in Herefordshire will have to provide a detailed plan at the Planning application stage to ensure chicken manure can be disposed of safely, this includes full details on the maure’s destination and application.  Farmers in the Wye Valley will particularly be impacted where chicken manure from intensive poultry units is being blamed for polluting the River Wye with excessive Phosphates, but the ruling will impact farmers across the UK and could set a precedent for other Local Authorities.

Since our article of 16th January reporting on a case of Foot and Mouth Disease (FMD) in Germany (see https://abcbooks.co.uk/fmd-germany/) there have been further outbreaks of the Disease on the Continent.  On the 6th March an outbreak was confirmed in a dairy herd (1,400 head) in Hungary close to the Slovakian border.  In addition to this, the Slovak Government has reported three cases of FMD.  The cases were identified in three separate premises housing cattle, close to the Slovakian-Hungarian border.  The UK Government had already taken action to prevent the commercial import from Slovakia of cattle, pigs, sheep, goats and other non-domestic ruminants and porcines such as deer and their untreated products, such as fresh meat and dairy.   Furthermore, since 8th March, travellers to GB have not been able to bring meat, meat products, milk and dairy products, certain composite products and animal by products of pigs and ruminants, or hay or straw, from Hungary and Slovakia.  Similar restrictions are already in place for products from Germany.

Strong livestock prices and lower feed costs sees Meadow Farm forecast to make a profit from production for only the second time in it’s history in 2025/26.  However, its SFI agreement is important in boosting overall farm profitability.  Any similar business that has missed-the-boat on the SFI will be in a far less comforatable position.

Meadow Farm is a notional 154-hectare (380 acre) beef and sheep holding in the Midlands.  It consists of grassland, with wheat and barley mainly for livestock feed.  There are 60 spring-calving suckler cows with all progeny finished, a dairy bull beef enterprise and a 500-ewe breeding flock.

The 2022/23 year was challenging; although output prices had started to rise (particularly for sheep), input costs increased substantially (feed costs were especially expensive).  Cuts to the BPS meant the overall farm made a loss.  In 2023/24, the gross margin improved due to lower costs and stronger livestock prices.  Overhead costs continued to drift upwards.  The farm again made a loss from production although it was much lower than the previous year.

The 2024/25 year, just finishing, shows an improvement in output once more.  Meadow Farm sells its finished stock in the autumn, so will not have experienced the significant rise in cattle prices since the turn of the year.  Some of the higher variable costs are due to the farm entering the SFI (i.e. herbal ley establishment).   The extra income from the SFI offsets the decline of the BPS and the business profitability improves.

Farmgate cattle prices are exceptionally high currently.  Even using a ‘conservative’ budgeting price compared to the current high prices, for the 2025/26 year about to commence, Meadow Farm is budgeted to make a margin from production.  This is for only the second time (previously in 2021/2022).  However, a (bigger) reduction in the BPS, sees business surplus, similar to the year just finishing.

 

 

 

 

2024 saw record farmgate prices for UK lamb.  Tight supplies had to be supplemented by imports and exports were lower.  For 2025 we may not see the sudden increase in the price of hoggs as experienced in March last year due to a higher carry-over of 2024 lambs.

According to the AHDB’s latest Lamb Market Outlook, total sheep meat production for 2025 is forecast to grow by 2% year-on-year to 272,000 tonnes.  However, this is mainly driven by the high number of lambs carried over from 2024.  Clean sheep slaughter for 2024 was down by 7% on the previous year with lambs taking longer to finish due to weather and disease issues.  The AHDB is therefore estimating the carry-over to be 4% higher than last year at 4.1m head.

This year’s lamb crop is expected to decline by 2% compared with the previous year to 15.5 million head, mainly due to a decline in the female breeding flock.  The rearing rate is forecast to be slightly better than last year, but is obviously weather dependent.  If a more ‘normal’ slaughter pattern is followed, a higher proportion of 2025 lamb crop will be slaughtered in the first half of 2025; forecast to be 1.4m head and 6m in the second half.  These numbers are similar to last year even though lamb numbers are less, resulting in a lower carry-over into 2026.  Adult sheep slaughter is expected to rise by 5% to 1.5m head on the year.  However, last year was particularly low and this will still be below historical levels.

In terms of trade, export volumes were 6% down from January to November 2024 compared with the previous year, due to tight domestic supplies.  France remains our key exporter, taking 54% of shipments last year (Jan-Nov).  In 2025, exports are expected to tick-up again by a modest 1% due to increased production and the EU Commission forecasting growth in import demand.

Imports for the period January to November 2024 were up by 41% (!) year-on-year due to strong consumer demand and lower domestic supply.  New Zealand was the main supplier at 60% of market share.  In 2025, imports are forecast to be down by 13% due to an increase in domestic supply and a reduction in demand.  With regards to demand, lamb volumes far exceeded expectations, increasing by 6% year-on-year.  Economic uncertainty is expected to curtail this in 2025 and AHDB is forecasting a -2% decline in lamb volumes for the forthcoming year.

The GB deadweight SQQ for the w/e 15th February stood at 736.9p per kg, some 47p per kg higher than at the same time last year.  But by 23rd March last year the SQQ had risen to 838.8p per kg.  It remains to be seen if it reaches those levels this year due to the higher carry-over.  Tight supplies going forward from a smaller lamb crop should continue to help maintain the current strong prices in the main though.

AHDB Outlook

In its latest Dairy Market Outlook the AHDB is forecasting GB milk production to increase year-on-year until the autumn.  In the 2024/25 milk year (April to March), GB milk deliveries are expected to total 12.43 billion litres of milk, 0.9% up on the previous year.  After a poor start to the year, fortunes flipped from September with higher milk prices and better margins resulting in increased production.  The farmgate milk price is currently above last year’s levels (see KFFs for latest information) and, although commodity prices have eased, they remain high.  Feed prices have fallen and the milk-to-feed ratio is looking favourable meaning farmers will be incentivised to produce more.  However, farmgate milk prices are likely to ease from April as production increases as we enter the ‘spring flush’.  Notwithstanding the increasing disease risks, most notably bovine TB and Bluetongue virus, AHDB forecasts that production is expected to remain above year-earlier levels until the autumn, but falling farmgate prices could see production ease from then onwards.

Global Markets

Latest information from the key milk-producing regions (Argentina, Australia, NZ, UK, US and EU) reveal global supply has started to grow and early forecasts for 2025 show marginal growth of 0.62%.  In terms of prices, results from the latest Global Dairy Trade events show a mixed picture.  At the beginning of the month the average index experienced a 3.7% increase but at the latest even held on the 18th February, the average index fell, albeit marginally, by -0.6% to $4,370 per tonne.  Notable movers were a further increase in the butter index by +2.2% to $4,370 whilst both SMP and WMP fell by -2.5% and -0.2% to $2,754 and $4,153 respectively.