Category: Dairy & Livestock

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.

 

The English and Welsh Governments have issued a consultation on banning the export of live animals for slaughter and fattening.  The Governments are also consulting on  wider proposals to  improve animal welfare in transport.  These include reduced maximum journey times, increased space requirements, stricter rules on transport in extreme temperatures and tighter rules for transporting live animals by sea.  The consultation can be found at; https://consult.defra.gov.uk/transforming-farm-animal-health-and-welfare-team/improvements-to-animal-welfare-in-transport/  It closes on the 28th January.

The RABDF’s Dairy Tech 2021 event has been moved to a two-week online event due to Covid.  Running from 3rd-17th February 2021, there will be daily online sessions which will commence after milking has completed at 10.30am.  According to the RABDF, the online event gives the chance to access some of the leading experts from across the world, but the plan is for Dairy Tech to return to Stoneleigh in 2022.  More details are expected in due course.

Those coming to England for seasonal poultry work will be able to start work immediately.  Unlike other international travelers, those arriving to work on farms from countries subject to the 14 day isolation rule, will not have to self-isolate as long as other rules and guidelines are adhered to.  Before traveling, workers will have to complete a Passenger Locator Form with their journey, contact details and address of the farm on which they will be living and working.  At UK border controls, workers will have to prove they are a seasonal agricultural worker.  On arrival into the UK, somebody from the farm where they will be living and working must collect them and take them straight there, face masks must be worn.  During the first 14 days, workers will need to follow social distancing rules and will only be able to leave the farm under strict circumstances, such as an emergency or to get essential supplies and medicines, only if these can’t be delivered.  The Government has produced strict guidelines for employers and workers to follow, these can be found at https://www.gov.uk/guidance/coming-to-england-for-seasonal-poultry-work-on-farms-and-processing-sites

The dairy industry appears to be coping better in the second lockdown, proving once again how resilient the industry is.  Commodity prices have remained fairly stable.  However, the middle ground liquid processors who supply the food service sector have once again been hit the hardest, but with schools and universities remaining open and also some of the big coffee chains still available for takeaways, the situation has been better than during the first lockdown.  There has also been an upturn in demand from from the retail sector as people buy more dairy products for home consumption.  And of course, this lockdown comes at a time of year when production is lower and there is more processing capacity.

Nevertheless, the spot price has eased as overall demand is weak.  However, cream and cheddar prices have remained stable and, if anything, are firming, perhaps helped by Christmas preparations.  Demand for butter is said to be weak due to the uncertainty still surrounding Brexit; the additional costs of trading have reduced interest in UK-sourced butter.

Farmgate prices have also remained stable, with a number of processors announcing prices to remain unchanged until the New Year, these include:

• Arla, Medina, Muller Direct, Meadow Foods, Saputo, Freshways, Yew Tree Dairy, Graham’s Dairy, Crediton Dairy and Belton Farm

There have also been some price increases announced, mainly from cheese processors and these include:

• A 0.5ppl increase from 1st December for suppliers to Helers
• 1ppl increase for those delivering to Barbers from 1st December

Further afield, the Global Dairy Trade (GDT) average index finished the month marginally down from where it started.  At the event held on 3rd November the index dropped by 2%, but at the latest auction it rebound by 1.8% to average $3,157.

 

Following our articles earlier in the month, there have been further outbreaks of the highly pathogenic Avian Influenza H5N8 strain.  These have been reported in captive birds at a wetland centre near Stroud in Gloucestershire and also in poultry and captive birds at a premises near Melton Mowbray, Leicestershire.  Protection and surveillance zones have been put in place around all the infected premises.  All the latest updates and advice can be found on Gov.uk via https://www.gov.uk/guidance/avian-influenza-bird-flu#latest-situation.

 

Defra and the Animal and Plant Health Agency (APHA) introduced a national Avian Influenza Provention Zone (AIPZ) on 11th November.  This means it is a legal requirement for all bird keepers to follow strict biosecurity measures, these can be found at https://www.gov.uk/guidance/avian-influenza-bird-flu#biosecurity-advice.  Those with over 500 birds, must also restrict access to non-essential people on their site, workers will need to change clothing and footwear before entering bird enclosures, and site vehicles will need to be cleaned and disinfected regularly.

The introduction of the AIPZ follows two confirmed cases of Avian flu (although unrelated) in the first week of November (see our article of 6th November https://abcbooks.co.uk/avian-influenza-identified/) and a further H5N8 case found in a broiler breeder farm in Herefordshire on 11th November.  In all cases Protection Zones around the farms have been put in place and the all the birds have been humanely culled.  A small number of wild birds near Dawlish in Devon and Weymouth, Dorset have also been identified with the disease.

Defra and APHA have advised that Avian Influenza is in no way connected to the Covid-19 pandemic which is caused by the SARS-CoV-2 virus which apparently is not carried by poultry.

The UK pig market continues to weaken, mainly caused by an oversupply of pigmeat across Europe.

The finished pig price rose significantly throughout 2019 and increased further in 2020, albeit more slowly, until mid-July.  Since then prices have fallen by nearly 10p per kg deadweight.  By the end of October the EU-spec SPP had fallen below last year’s value for the same week (although it was still in the region of 10p per kg above the five year average).  Prices have been struggling across Europe and this is having an adverse affect on domestic pig meat values.  Values were already declining before Germany reported its first case of African Swine Fever (ASF) but, with an over-supply now in the EU (see September’s article) downward price pressure has increased further.

England is now in its second lockdown due to Covid 19 and other areas of the UK are under differing levels of restrictions.  But this is not expected to have such a severe impact on markets as seen in the spring.  The panic buying seen in the first lockdown has not reoccurred.  The retail sector is more ‘ready’ and has learnt from the previous lockdown.  However, according to the AHDB, pork actually performed well in the first lockdown, with sales of pig meat up by 13% in the 24 weeks ending 9th August.   This was helped by a significant growth in barbeques this summer; an increase of 44% year-on-year, with total pork consumed at BBQ occasions up by 56% on the previous summer period (April-August).  It may be difficult to replicate this consumption in a winter lockdown.  Even so, prices are still expected to be more vulnerable to the weak EU market than a second lockdown.

But the second wave of the virus could effect processing capacity; there could be disruption to supply chains and even plant closures.  This may mean pigs have to be kept on farms and the AHDB is advising producers to ensure they have the capacity to hold pigs in case of such closures.

 

Avian Influenza (Bird Flu) has been identified at two different sites in England on 2nd and 3rd of November.  However, they are not linked and it has been confirmed they are two different strains.  The first case was identified as the H5N2 strain on a small commercial premises near Deal in Kent.  All 480 birds will be humanely culled and a 1km Low Pathogenic Avian Influenza Restricted Zone has been put in place around the infected farm.

The second case is at Frodsham in Cheshire in a broiler breeder unit.  It has been identified as the H5N8 strain, a highly pathogenic variant and is related to the virus which is currently circulating in Europe.  All 13,500 birds will be humanely slaughtered and a 3km Protection Zone and a 10km Surveillance Zone have been set up around the infected site.

Public Health England has said the risk to public health is very low and according to the Foods Standards Agency avian influenzas pose ‘a very low food safety risk’.  The most likely source of the outbreak is from wild birds migrating from mainland Europe during the winter period.  Keepers are advised to protect poultry from wild birds by keeping living and feed areas covered and exercising good bio-security measures.

Beef Market

Finished cattle prices have eased slightly over recent weeks but remain strong.  Having experienced good growth since the lows of April/May, prices dipped during September but have now stabilised with deadweight prices in the region of 45p per kg ahead of last year and 15p per kg above the five-year average.  However, there have been some differences in price movements across the regions.  Those in the north have experienced slight reductions in the latest week-on-week comparisons, compared to south and central areas which have seen minor increases.  This could be due to regional lockdowns in the north having an effect on demand for eating out of the home.

The cull cow price remains very strong.  Prices usually fall seasonally around now, but deadweight values are trading back above the five-year range, where it has been for most of the time since July.  The cull price rose significantly from April/May to August, probably due to a switch from more expensive ‘out of the home’ meals to cheaper ‘minced-based’ and ready-made meals during lockdown.  The cull price dropped in August and through September (although still quite strong), possibly as customers traded-up during Eat-Out-to-Help-Out.  Since October prices have once again started to rise.

Beef Exports

On 30th September the first shipment for 24 years of UK beef departed for the US.  Access was granted back in March for a deal worth an estimated £66m over the next five years.  The first consignment included a select number of cuts, including sirloin cannon and topside mini beef joints to be show-cased at the AHDB’s ‘British Roast Beef’ launch aimed at influencers and buyers in New York, New Jersey and Pennsylvannia.  At £66m over five years, this would equate to a simple average of £13.2m per year.  To put this into context, exports to Ireland averaged £135.6m p.a. for the years 2017-2019.  However, market access to the US could provide a valuable opportunity in the long-term as, per capita, meat consumption in the US is three times the global average.

Lamb Market

The finished lamb price continues to remain strong for this time of year, with the liveweight price showing a rise in the most recent week.  The GB liveweight SQQ remains above the five-year range and is about 35p per kg higher than last year.  Tight supplies appear to be holding prices up.  Deadweight slaughterings have fallen well below last year’s levels over the last couple of weeks and have been down on 2019 since the end of August.  Imports from New Zealand and Australia are also expected to remain low.  This is due to lower production in these countries and also the diversion of product to the expanding Chinese market, due to the ongoing protein deficiency as a result of ASF.  Strong finished lamb prices, plenty of grass and cover crops is having a positive impact on the store lamb trade.  But further lockdown measures and a No Trade Deal with the EU is likely to negatively affect export volumes and prices.