Wednesday, 21 December 2011

Tidings of good fortune for English beef and sheep meat

As 2011 comes to an end, it’s very encouraging to be able to look back on a year of vastly improved fortunes for English livestock producers, with prices reaching unprecedented levels for both sheep and cattle.

Robust domestic demand combined with strong export sales resulted in the R4L steer price breaking through the 300p per kg barrier in early April. Ongoing tight supplies on the global market, together with the recent opening of 37 non-EU export markets, contributed to continued strong demand, and by early December the price reached 346p per kg.

Overall cattle slaughterings have been higher in 2011 than year earlier levels, however numbers have fallen back as the year has progressed, with the most recent figures showing that October throughputs were 6% lower on the year.

Strong demand for beef on the export market resulted in UK beef shipments increasing by 36% year on year in the January to October period. Although the EU remains the leading market for our beef, exports to non-EU countries have increased by two thirds in the 10 month period.

Looking ahead to 2012, supplies of slaughter cattle are expected to remain tight. Firm demand on the continent as well as the growing number of new markets is expected to keep export demand competitive. This combined with reduced volumes of imported fresh and frozen beef throughout 2011 and in to 2012 means that the outlook for UK beef production in 2012 is promising.

A buoyant export market in 2011 has also resulted in record prices for sheep producers, with the average SQQ lamb price reaching 260p per kg at auction at its peak in mid-May. New season lambs grew well throughout the dry spring and large numbers of spring lambs were encouraged on to the market in May and June by the prevailing high prices.

Slaughter statistics show lamb numbers in June were 10% higher than year earlier levels, applying some downward pressure on the price in line with the seasonal trend. However, the SQQ remained ahead of year earlier levels throughout the summer and autumn months, averaging 192p per kg in November and firmed further in early December.

Strong demand has led to good growth on the EU and wider export markets in 2011, with overall sheep meat shipments increasing by 11% in the first 10 months of the year. This increase is at a higher level than the uplift in production, meaning a larger proportion of UK sheep meat has been exported this year. In contrast, tight supplies on the global market have resulted in a 14% decline in imports for the same period, with shipments from New Zealand 17% lower than year earlier levels.

With some growth in the breeding flock, higher ewe lamb retentions in 2011, a predicted slight reduction in the lambing rate and lower adult sheep cullings, overall sheep meat production for 2012 is likely to be slightly lower than 2011 levels.

We can’t afford to ignore the situation in the Eurozone which could, of course, have an effect on the fortunes of the beef and lamb sectors. The market is set to see greater volatility which, as a rule, is not great for business. However, ongoing work in non-EU markets and the continued production of high quality beef and lamb puts us in a stronger position than other countries in the international economic storm. With global supplies remaining tight and demand increasing, it is very likely that demand for our products will remain robust. So hopefully our beef and sheep producers can enjoy a little festive cheer!