Beef
Prime cattle deadweight prices declined in the first week of December but still remain firm. Refer to Key Farm Facts for the GB deadweight price for all finished steers. It shows how prices have risen since the end of May and are about 43p per kg deadweight above the same week last year and also in the region of 24p per kg dw above the five-year average. Prices are currently higher than for the same week in any of the last five years. Tight supplies are helping to support prices and this is expected to continue. The latest data from BCMS (October) shows the numbers of prime cattle available (12-30 months) are 5% (83,400 head) less than last year. Beef females and males are reportedly down by 3% and 4% respectively and dairy males by 19% as more sexed semen is used in the dairy herd.
It is therefore disappointing to see a decline in prices at a time of year when you would expect demand to be increasing. It is perhaps due to uncertainty over Brexit. There are reports that some of the UK supermarkets may be favouring Irish beef in the short-term and leaving GB cattle ‘in reserve’ in case there are interruptions to imports come 1st January.
Lamb
The GB finished lamb price has remained strong throughout the autumn and has been on the rise again since the end of October (see Key Farm Facts). The GB deadweight SQQ is about 50p per kg above last year’s level for the same week and 80p per kg above the five-year average. Weekly prices have been at five-year highs since July. This has had a knock-on effect on store and breeding sheep sale prices which have also been strong, particularly in the light of a possible No Deal Brexit.
But why are finished prices so good? It seems tight domestic supplies and strong lamb prices in France are supporting GB values. According to the AHDB, in November the UK lamb kill was 6% lower than last year (1.16m head) and the lowest since 2015. In June and July lambs were coming to market more quickly than usual, but this has not been maintained. Furthermore, adult sheep slaughter is significantly behind last year, with November 20% less than in 2019. This lower level of adult kill may see more lambs being carried over into the New Year for slaughter as fewer lambs are required for replacements. Or, perhaps, due to strong prices this year, intentions have shifted to keeping more sheep and we may see the breeding flock expanding. The outcome of Brexit is likely to inform this decision.
With 40% of all UK lamb exports going to France, developments there are key to the UK price. At the end of November the French reference price for deadweight heavy lambs was 76p per kg higher than in 2019 and over £1 more than the five-year average. Tight supplies have caused the increase in price – demand has actually fallen in France due to closures in the food service market because of Covid. Are UK producers being lulled into a false sense of security with the high finished, store and breeding values? French imports of UK sheep meat have already fallen this year by 14%. If the UK does not agree a trade deal with the EU, prices in France may rise higher, but the value of sheep meat in the UK would decline as a substantial tariff would apply, making UK exports less competitive.
Pigmeat
The finished pig price has seen a steady decline since July. The EU-spec SPP is now about 10p below year-earlier levels, but still nearly 5p per kg more than the five year average. Coronavirus and ASF in Germany are impacting values. Reports suggest there is a backlog of pigs accumulating on UK farms as abattoir throughputs are being restricted due to Covid-19 measures. The total number of clean pigs slaughtered in November was 6% less year-on-year and 7% lower than October figures. Consequently, according to Defra, clean carcase weights in November were 0.82kg more than in October and 3.59kg heavier than last year; the heaviest average clean carcase weight on record.
In Germany, where China’s ban on German imports is still in place due to ASF in the country, the European market is having to absorb the majority of this product. Consequently this is putting downward pressure on EU prices, which has extended to the GB market.