July 2016 Market Overview

Beef

UK – The GB all prime average strengthened another 2p on the week earlier, to average 321.0p/kg. Reports suggest that competition for livestock from processors is still robust. The average R4L steer and heifer values both moved up another penny on the week at 333.3p/kg and 333.0p/kg respectively. R3 young bulls moved up 2p to 321.0p/kg.

 

cattle raising

 

This move demonstrates that the market is currently settled in favour of the producers. The all prime average has strengthened by 11p/kg in the past six weeks and has resulted in prices moving closer to last year’s position. In the latest week, however, this time  last year price VL’s have also become very tight, many packers are finding their frozen stocks have become depleted and thes were just on the cusp of their sharp upwards trend, a development which lasted for a number of weeks. In the short term, indications are that processors are likely to be more careful in the coming weeks. Unless demand performs better than expected, any upwards pressure on price may well be more subdued compared with that of July last year. refore have the ability to be bullish on their fresh sales as the pressure to sell has reduced.

Australia – Australian cattle supplies remain tight and prices strong. Australian cattle prices are expected to remain strong through Q3, given ongoing tight cattle supplies. Buoyed by recent rains, cattle prices have again risen to record levels in June.

Argentina – Beef exports have reduced 3.5% however prices have stayed firm throughout June and have mirrored the level we saw at this time in 2015 and 2014

Uruguay –
Slaughter number surpassed the 50k mark for the first time in 2016 last week. Live cattle exports have equalled a historic high with demand from Turkey continuing to increase (currently 88% of all live cattle exports). There has been a gradual increase in finished cattle prices throughout June and is likely to continue throughout July and into August.

Brazil –
Slowing economic conditions will continue to support increased Brazilian beef exports. Exports to China, which reopened in June 2015, totaled more than 70,000 tons from January to May, while exports to Saudi Arabia, another new market, are more than 11,000 tons in the first five months of 2016. This is proof that there is stiff competition for the UK for Brazilian raw material.

China –
China’s slowing economy is affecting general beef consumption, but higher and middle-income earners are supporting continued imports as they continue to seek quality beef products. Beef prices will remain stable in the coming quarter, as supply and demand are likely to be balanced.

USA –
US market volatility continues to be a market disrupter. The combination of marked week-to-weekprice volatility, and equal volatility in the futures market, has made trading conditions difficult to predict. Prices have firmed

Lamb
The liveweight lamb trade has declined in recent weeks as the new season continues to pick up. In the week ended 25 June, prices reduced by 10p on the level from four weeks previously. However, prices had risen in the previous week. This left prices 24p/kg higher than the same week in 2015, following sharper falls in the same period last year. Price falls may have been linked to a PigsInFielddrop in demand as supplies remain tighter than this time last year. Numbers of lambs coming to liveweight markets in GB have remained lower on the year.
Deadweight lamb prices have seen similar falls to those seen in the liveweight markets. In week ended 25 June, the season prices averaged 397.9p/kg, having fallen by 5p over the past month. However, at this level, the deadweight SQQ was also above its level in the same week last year.

Pork
Reduced kill numbers (Dutch down 20%, Germany and Denmark down 20%) on the continent have created turmoil in both the primal and manufacturing cuts. Lack of availability has forced prices skyward. However even though prices have increased considerably, prices levels are still at a historic low. Leg prices have increased by £0.10 - £0.15 per kilo (50p higher than 6 months ago) and backs have also risen by a similar level.

Poultry
Broiler slaughter numbers have remained consistent within the UK in recent month consistently averaging around 18 million birds per week with average live weights dropping slightly to 2.2kgs (-1.1% YoY). In recent weeks the prices for poultry meat has increased significantly due to the weakening of the £. The UK bird became better value almost overnight and domestic retailers and further processors will look to increase order from UK suppliers if prices on the continent continue to rise.

Currency
In the wake of the result of the EU referendum, what are the short-term consequences for the UK meat sector? Though this decision will have widespread effects on the meat industry in the long term, much will depend on the terms of the UK’s exit. Full details will be unclear until negotiations are concluded. In the meantime, the UK will remain a part of the EU and will continue to be bound by the existing conditions of our membership.
Once the result of the referendum was clear, one of the first effects was seen in UK currency. The value of the pound fell sharply against the US dollar and the euro, as well as a number of other currencies, during the day after the result. Further falls were seen at the beginning of this week, as uncertainties continued. As of 29 June, £1 bought €1.21, down 10 cents since immediately before the referendum result and the lowest level in over two years. Against the US dollar, the pound hit its lowest level since 1985, at £1 = $1.32 and it was also at a three-year low against the New Zealand dollar.

Download the July Report 2016 as a PDF file