June 2018 Market Overview

Liveweight lamb prices dip below year levels

In the week ending 27 June, the GB liveweight NSL SQQ stood at 216.24p/kg, which is nearly a 22p decline from the previous week. For the first time since last November, the new season lamb measure has dropped behind previous year levels, to nearly 2p below the same week in 2017; although is still above the five year average for this time of year. While daily prices did fluctuate, overall they moved downwards.

Throughputs fell for the second consecutive week in a r

ow, falling 11% (9,500 head) to 81,100 head. Meanwhile, the number of hoggets halved on the week, to around 6,200 head. New season lamb throughputs also declined marginally, to 74,900 head. The total number of new season lambs recorded at auction markets so far this year in Great Britain is 26% (170,300 head) below year earlier levels, equivalent to around two weeks’ throughput at current levels.

During the week ending 23 June, the GB deadweight NSL SQQ fell by 

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17.4p/kg to 524.6p/kg. However, the measure still stands around 37p/kg above the previous year’s level. Estimated slaughterings for the week stood at 227,300 head, an 8% (16,500 head) increase from the previous week but is slightly lower than the same week last year. Weekly estimated slaughterings this year have consistently been behind year earlier levels since the end of March. Industry reports have continued to suggest that some new season lambs are coming forward under finished as producers capitalise on higher prices which may well be adding downwards pressure to the SQQ.

GB Cattle population data for April 2018, provided by BCMS, shows that for the first time since October 2015 beef cattle numbers on the ground aged 0-6 months decreased, by 5,000 head compared to the year earlier. The lower numbers in April are inevitably linked to higher mortality rates on farm following a hard winter and difficult calving periods. In addition, uncertainty over Brexit could be causing producers to hold steady on expansion plans until further clarity on any exit deal is provided. Dairy animals in the same age band continue a longer term trend of declines amid the contraction of the dairy herd.

Cattle population June 2018

Short term production supplies are generally indicated by the number of male animals and beef females aged 12-30 months. A large portion of these will be entering the production chain in the next 12 months, apart from some breeding beef females. Figures provided by BCMS indicate that supplies are up by 23,500 head compared to 2017. Dairy females aged 24-30 months are down 5,500 head, another result of the dairy herd contraction, which will also be affecting beef cattle numbers, with fewer dairy cattle on the ground to put to beef sires.

Native breed numbers have been increasing in recent years as producers look to capitalise on an increasing number of processors offering native schemes at premium prices. Angus and Angus X cattle under 30 months are up 39,000 on the year and there are 22,000 more Hereford and Hereford X cattle on the ground. Collectively these two main native breeds made up over one quarter of beef cattle aged under 30 months in April 2018.
In the first four months of 2018 New Zealand exported 154,000 tonnes

 of fresh/frozen beef, 4% higher compared to year earlier levels, however still less than shipments in 2016. The US is New Zealand’s biggest export market and received 74,000 tonnes, just under 50% of total exports. New Zealand has recently been expanding its export markets in Asia, as a result Exports to China are up 16% (+5000 tonnes) while exports to Malaysia and the Philippines are collectively higher by 1,500 tonnes (+40%). Despite increasing exports globally, due to Asian markets requiring lower value cuts, overall value is down by almost £9 million (-2%).

New Zealand’s production year runs from October-September. In the curr

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ent year New Zealand beef production is up by 7% compared to the previous cycle to total 499,000 tonn

es. The government recently announced an M.bovis eradication plan, part of which is the intent to cull 150,000 animals over a 2 year period, around 1.5% of total population. Although this will be predominately

 focused on the dairy sector, it may have an impact on beef production as NZ dairy farmers look to re-build their herds rapidly, reducing the amount of beef sires put to dairy cattle.

New Zealand P2 steer prices strengthened slightly at the beginning of the year, the price then dropped significantly between February and April and hit a two-year low of 503 cents/kg in the week 23 April, remaining largely unchanged until the middle of May. Since then prices have recovered slightly, however as of 25 June, the P2 steer price is 34 cents below year earlier levels an

d currently stand at 513 cents/kg, noting that June 2017 achieved the highest price since November 2015.

Download the June Report 2018 as a PDF file