Category: Dairy & Livestock

The AHDB is forecasting GB milk deliveries to be down -0.3% for the 2024/25 milk year.  Supplies to date are down by -0.9% due to poor weather impacting grass growth and quality through the spring and summer.  But a recovery is forecast for the remainder of the year.  Deliveries in September were ahead of last year and the continued up-tick in the farmgate milk price should give producers some encouragement to increase winter production.

Global milk production continues its ongoing decline with latest data (July) showing a -0.4% fall year-on-year.  There has been growth in New Zealand and Australia but this is being more than offset by declines in Argentina, the EU and the US.  This means milk supplies continue to be tight which has fuelled the growth in milk prices.  Expectations are for global milk production to remain stable over the next 12 months, with a small decline of -0.1% in the key exporting regions.

Low production, strong demand and declining stocks saw fat prices on UK wholesale markets reach record-breaking levels in September.  Butter rose by £620 per tonne to £6,730 per tonne and bulk cream by £450 per tonne to £3,147 per tonne in September.  Reports suggest these prices may have peaked especially as production increased in September, but Christmas demand should help to support prices and the availability of domestic dairy products remains tight.  However on the global market, the GDT price index fell by -0.3% at the latest event held in October.  SMP and Butter fell by -1.8% and -0.3% respectively, while Cheddar rose by +4.2% and WMP remained the same at $3,553 per tonne.

Domestic farmgate prices continue their upward trend, with some big increases announced for November including:

• a 1.5ppl increase announced by Wyke Farms taking their manufacturing litre to 44.48ppl
• Barbers has announced a further 1.54ppl increase, this is 8 consecutive months of increases and takes its manufacturing price to 44.57ppl
• suppliers to Muller who meet the conditions for Muller Advantage1 will receive a 1ppl increase to 42.25ppl
• Freshways, after a 1ppl increase in October have announced a further 1ppl for November taking their standard litre to 42ppl.

The takeover of Yew Tree Dairies in Lancashire, by Muller, has been approved by the Competition and Markets Authority (CMA).  The CMA found no issues with the deal, announced in June, despite fears that it reduces the number of milk purchasors.

The pig price has been relatively stable over the past year, albeit drifting slowly downwards.  The SPP (EU spec) was trading in the region of 212p per kg deadweight at the beginning of the year and is now just under 208p per kg; falling just 4ppkg.  This is around 12p per kg lower than October 2023, however last year prices were at a record high and prices are currently substantially above the 5-year average.  Furthermore the cost of production has hardly changed since Q2 2023 and, although net margins have fallen slightly, they are still positive around £12-£14 per pig.

In terms of pigmeat production, the AHDB is forecasting a 2.7% increase in 2024 compared with 2023 to 951,000 tonnes.  In the first eight months of 2024 clean pig kill totalled 6.78 million head.  This is up 1.6% on last year but the increase in production has also been driven by higher carcase weights, averaging at 90.1kg January to August; an increase of 1.3kg compared with 2023.  Throughputs are expected to continue to increase through the rest of the year.  Looking ahead to 2025, smaller year-on-year growth is forecast; pig meat volumes are estimated to increase by just 0.9% on 2024, driven by a 0.8% increase in clean pig slaughter with minimal change in carcase weights – subject to no diesease outbreaks.

The latest Defra census showed that the English female breeding herd has fallen 2% in 2024.  However, AHDB is forecasting minor growth in the pig breeding herd over the next couple of years, if market conditions remain favourable.  But this would only see the herd size return to 2022/2023 levels, with no recovery to historic pig population size expected in the foreseeable future.

In terms of trade, in the first half of 2024, UK export volumes of pig meat have fallen 2.4% to 148,000 tonnes, the lowest volume since 2015.  This is due to subdued demand from China, and increased competition from major exporting countries such as Brazil and the USA.  The UK is very reliant on the Aisian markets for carcase balance – in particular, offal.  By contrast, imports have seen year-on-year growth in the first half of the year, up 1.4% to 387,000 tonnes.  The EU pig price has fallen much quicker than our domestic price and the price differential has widened meaning EU pigmeat is more attractive to some purchasers – further bolstered by a weakening Euro.  Little change is expected over the remainder of the year and therefore UK exports are forecast to end the year back by 2-3%, meanwhile imports increase by 1-2%.

Into 2025, it is expected that export volumes will continue to be subdued and import volumes will remain high if EU prices continue to hold a large price differential.   Something to keep any eye on is increased geopolitical tensions between the EU and China.  The EU is the biggest exporter to China, but the ongoing fallout between the two could see China imposing high tariffs on EU product.  This could mean surplus product on the market putting downward pressure on domestic prices.  Although, there could be potential for us to increase exports to China.

In the first seven months of the year, retail demand for pork fell 2.2% compared with 2023, according to Kantar, not helped by poor summer weather.  Meanwhile the foodservice market has performed better than expected with volumes estimated by the AHDB to be up 5.2%.  Overall, pork volumes for 2024 are expected to be down by 2% compared to 2023 and by 4% compared to 2019. But this is hoped to be more stable in 2025, if inflation continues to decline and wages rise.

Beef

The prime beef farmgate price has been on an upward trajectory since July.  The GB deadweight all-steer price has risen by over 35p per kg over that time to average 513.8p per kg and some 524.5p per kg for those hitting R4L specification.  The all-steer price is 31.9p per kg more that at the same time in 2023.  Furthermore the strong prices look set to continue as seasonal demand continues to outpace supplies of cattle, as we move into procurement for the Christmas period.  Demand is reported to be strong across both retail and foodservice sectors.  Data from Kantar for the 12 weeks ending 29th September shows an additional 2,100 tonnes of beef purchased compared to 2023.

In contrast, the cull cow price has shown a decline as record numbers come forward ahead of winter housing.  The deadweight price fell by 2p per kg to 353.6ppkg for the week ending 19th October.

Sheep

The GB new season lamb SQQ price has been easing downwards since the end of August, but looks to be stabilising as deadweight prices increased 1p per kg for the week ending 19th October to average 618.5ppkg.  Over this time the difference between 2024 and 2023 prices has narrowed, but 2024 values are still 48p per kg higher than last year.  Tight supplies continue to support farmgate prices; the GB clean sheep kill to the week ending 19th October is estimated to be down by 8.5% on the year to 8.46m head.  However, demand is also strong.  According to the latest Kantar data, for the 12 weeks ending 29th September, lamb outperformed the total grocery market, with a 5.5% increase in volumes purchased.  This, combined with a 4.8% increase in average prices paid, resulted in a 10.6% increase in retail spend on lamb products in this period.

Although midge activity is slowing down, new cases keep coming to light, mainly through active surveillance and pre-movement testing.  Following identification of a new case in cattle on the Buckinghamshire/Northamptonshire border on 25th October the restricted zone has been extended on to include all of Northamptonshire.  The zone now covers Bedfordshire, Berkshire (part), Buckinghamshire, Cambridgeshire, City of Kingston upon Hull, East Riding of Yorkshire, East Sussex, Essex, Greater London, Hampshire (part), Hertfordshire, Kent, Leicestershire (part), Lincolnshire, Norfolk, Northamptonshire, Nottinghamshire, Suffolk, Surrey and West Sussex.  To keep up to date go to https://www.gov.uk/government/collections/bluetongue-information-and-guidance-for-livestock-keepers.

Outbreaks of the bluetongue virus continue to spread in the east of England.  Since the end of August the number of confirmed cases has risen to nearly 100.  There are likely to be a number of further infections in livestock that have not been formally identified.  The latest information on the outbreak can be found at  – https://www.gov.uk/government/collections/bluetongue-information-and-guidance-for-livestock-keepers .  Defra has authorised the use of three bluetongue serotype 3 (BTV-3) vaccines within the United Kingdom.  Unlike the authorised vaccines for other BTV serotypes, these BTV-3 vaccines only reduce viraemia rather than prevent it.  This means they reduce the effect of the disease but do not stop animals being infected.  All the usual movement controls still therefore apply to vaccinated stock.  More details are to be found at – https://www.gov.uk/government/collections/bluetongue-serotype-3-btv-3-vaccine-permits.

The Government has announced a new bovine TB eradication strategy.  It has stated that it aims to bring the badger cull to an end within this Parliament.  Ending the badger cull was in Labour’s manifesto, with some expecting this to happen more quickly.  The existing cull processes will be honoured whist the new measures are being rolled out.  The new measures include:

• Undertaking a badger population survey.  The Government has said it will ‘work at pace’ to launch a new survey this winter, this will be the first to be carried out out since the one between 2011 and 2013
• The introduction of a new National Wildlife Surveillance Programme to provide an up-to-date understanding of the disease in badgers and other wildlife, such as deer, to inform how and where TB vaccines and other eradication measures should be rapidly employed
• Establish a new Badger Vaccinator Field Force to increase badger vaccination ‘at pace’ to drive down TB rates
• A Badger Vaccination Study to allow the Government to rapidly analyse the effect of the badger vaccination on the incidence of TB in cattle
• Accelerating the work on the development of the cattle vaccine.  The Government has said the next stage of field trials will commence in the ‘coming months’, with the aim of delivering an effective cattle TB vaccination strategy ‘within the next few years’.

In addition, the Government has said it will publish more information about animal and herd-level bTB risk on ibTB (an interactive map which can be found at https://ibtb.co.uk/) to help farmers manage their risk when purchasing cattle.

Following the consultation held earlier in the year (see our article of 22nd January 2024 https://abcbooks.co.uk/free-range-egg-consultation/) Defra will alter legislation to allow free-range eggs to continue to be labelled as such for the duration of any mandatory housing measures in England and Scotland.  Under the existing Egg Marketing Standards Regulation, the maximum amount of time allowed for hens to be kept indoors during periods of mandatory housing measures (i.e. bird flu), and the eggs they lay to be still labelled as free-range, is 16 weeks.  After this period of time the eggs must be labelled as ‘barn’.  Defra has said if housing measures are introduced for free-range hens, notices will be issued to inform the public and media of their introduction.  It will also encourage the egg industry and retailers to communicate this to their customers.

Production

AHDB reports that GB milk production was down 0.9% in the April-July compared to the same period in 2023.  However, with prices firming and reasonably good weather conditions, it is believed that production for the rest of the summer and autumn will at least match last-year’s levels.

In global terms, milk production in the main exporting countries is forecast to be almost static in 2024 (down 0.1%).  Output declines in NZ, Argentina and the UK are matched by increases in the US, EU and Australia.

Such meagre growth in output is contributing to firming prices.  However, increases have been slow as global demand remains weak.  In particular, Chinese demand has been very poor.  It imported its lowest amount of dairy products since 2018 in the first half of 2024.  Part of this is down to the continued struggles of the Chinese economy.  However, the country has made significant investments in its own dairy sector and is now satisfying more of its own demand.  Chinese imports may therefore be less of a factor in driving global prices in the future.

Prices

At the latest GDT auction on the 20th August the index rose by 5.5% to reach $3,920 per tonne.  This is the highest level seen since the summer of 2022 and is now 36% higher than the same time last year.

Domestic farmgate milk prices also continue to edge upwards.  A number of companies have announced price increases from the 1st September.  Amoung these are;

• Muller – standard litre up 1.25ppl (to 40.25ppl)
• First Milk – manufacturing price up 1ppl (to 42ppl)
• Leprino Foods (previously Glanbia) – up 1ppl to 41.5ppl
• Meadow Foods – price up by 1.5ppl

New controls came into force in England from 21st August and in Wales from 22nd August to safeguard Britain’s sheep and goat populations from outbreaks of Peste des Petits Ruminants (PPR).  PPR poses no risk to human health but is a highly contagious disease affecting goats and sheep.  The new controls will strengthen the requirements for bringing sheep and goat meat and milk into Great Britain from the European Union (EU), European Free Trade Association states, Greenland and Faroe Islands.  In recent months, there have been outbreaks in mainland Europe, and the commercial import of certain commodities is already restricted to prevent the spread of PPR into Great Britain.  However, the new rules will mean it is now no longer permitted to bring unpackaged sheep and goat meat and meat products, or sheep and goat milk and milk products, from these areas.  Additionally, commercially produced and packaged sheep and goat milk and milk products are not permitted from Greece or Romania.  Scotland is expected to introduce new controls shortly.