Farm Ireland

Tuesday 25 October 2016

Sterling is still the X factor for beef

But a price drop in 2016 looks inevitable with significant increases in stock numbers both here and on the Continent

Joe Burke

Published 13/01/2016 | 02:30

Calf registrations here last year increased by almost 120,000 head.
Calf registrations here last year increased by almost 120,000 head.

At farm level, the beef market during 2015 experienced a considerable recovery on the low levels of the previous year, with average prices for R grade steers up 8pc or 30c/kg deadweight. This performance reflected 5pc lower Irish supplies of 83,000 head, combined with stronger returns from the UK market.

  • Go To

Following an initial rise early in 2015, cattle prices held stable throughout the spring, before peaking during June and July. At that time, steers and heifers achieved base prices of up to €4.30/kg and €4.40/kg deadweight, respectively. However, over the autumn months prices declined steadily to fall below the previous year's levels in December.

In Britain, R3 steer prices are currently averaging £3.42 sterling per kilogramme, equivalent to €4.60/kg. In sterling terms, British cattle prices declined slightly on average during 2015, in comparison with the previous year.

Prices there are starting off the year about 30p/kg below January 2015. However, a 10pc weakening in the value of the euro, from 80.5p in 2014 to 72.5p last year, made the UK market more favourable for Irish beef.

As a result, the UK is estimated to have accounted for 54pc of Irish beef exports in 2015, up from 51pc the previous year. The euro is valued at 74p presently, compared to 78p this time last year.

However, continental European markets, which collectively accounted for 43pc of Irish beef exports in 2015, have proven more challenging. For much of last year, finished cattle prices in these countries were below those prevailing in Ireland. For example, R-grade young bull prices at the year-end were €3.76 in France, €4.04 in Germany, €3.86/kg in Italy and €3.69/kg in Spain.

Slow recovery

Overall within Europe, consumption of beef is estimated to have recovered by 0.4pc for the second consecutive year, having previously dropped by more than 5pc over the period from 2011 to 2013.

On the home market, retail sales volumes for beef fell by 1.7pc for the 12 week period up to early-December. Retail beef sales in the UK also fell slightly (-0.7pc) over the same period, with most of the decline in roasting and stewing cuts, while sales of steaks, burgers and mince were slightly improved.

Recent sales of beef by French retailers were 1.7pc higher than last year's levels. Similarly, beef consumption in the German market also shows signs of improving.

Beef sires

Calf registrations in Ireland during 2015 increased by almost 120,000 head, or 5.7pc, with most of this increase arising during the spring months.

While expansion in dairy is responsible for the majority of this growth, there has been a significant increase in the crossing of dairy cows with beef sires, which accounts for more than 80,000 head of the additional calf births.

In particular, Angus and Hereford-sired calves increased dramatically, by 19pc and 20pc, respectively. This is largely driven by growing demand for these animals through premium branded beef schemes.

Exports of live cattle declined by 25pc or 59,000 head in comparison with the previous year. All age categories of stock recorded fewer exports in comparison with recent years, partly as a result of the increased cost of Irish store cattle, weanlings and calves. Calf exports were 16pc lower.

Despite this, trade to the Netherlands and France increased, with good demand for male Friesian calves for veal production. However, this was more than countered with the effective suspension of exports of calves to Belgium on the back of new IBR-related restrictions.

While the increase in numbers to France and Netherlands was just shy of 9,000hd, the drop in trade to Belgium equated to a over double this - 21,000hd.

Meanwhile, the number of weanlings (aged 3 to 12 months) and store cattle (aged 12 to 21 months) exported live declined significantly. They were down by 43pc in comparison with 2014 levels. The lower export activity reflects reduced demand from feedlot buyers in Italy and Spain, along with the troubled political situation in North Africa. Shipments to Libya fell sharply, following exports of 18,000 head the previous year.

Joe Burke is the beef sector manager with Bord Bia and is currently a Nuffield Scholar looking at producing beef from the dairy herd

Indo Farming


Top Stories