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LAMMA 2021

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AHDB's Will Jackson: 'Multiple triggers behind beef price pressures'

AHDB Sector Strategy Director for Beef and Lamb Will Jackson outlines the factors driving current low beef prices.

A perfect storm of factors is putting downwards pressure on beef prices which is causing significant concern across the industry at the moment, according to AHDB’s Will Jackson, sector strategy director for Beef and Lamb.


However, as the year progresses, tightening supplies and lower calf registrations point to improving
fortunes in the sector.


Mr Jackson said: “We are seeing a number of factors causing downward pressure on UK prime cattle beef prices at the moment.

 

Since the end of September last year, despite a slight rally in May, we have seen a 44p fall in R4L steers, which is the biggest drop since 2014.

 

Demand


“Historically, we do see a drop in the first half of the year, which reflects weaker demand for some cuts during this period.

 

“This weaker demand was evident in 2017 and 2018 but a high European demand for manufacturing beef more than compensated and this led to an overall rise in prices.


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“Reports show that this manufacturing beef demand has subsided across Europe this year.

 

“This is alongside a slight drop in domestic retail demand of 1.8% in the last six months, with burger and grill sales down when compared to the heatwave we saw last summer.


“In addition, there has been an unusually high amount of beef in cold storage, partly linked to Brexit
preparation, being added to leftover stock from the winter period, leading to ample supply.


“There has also been a slight lift in the number of prime cattle slaughtered in the UK but, more tellingly, weights have been up by around 6kg per carcase, which has increased the volume of beef
in the system.

 

“This has been caused by more hard feed through last year’s drought, when forage was at a premium, and a mild winter, which has also had a knock-on effect of reduced finishing time.


“In terms of trade, fresh and frozen beef exports have increased by nine per cent, while imports are
down by 10 per cent.

 

“However, exports have been at a seven per cent lower value than in 2018, which is again linked surplus in the market and higher availability from other markets.

 

Trade

 

“Although Irish trade with the UK is down, cattle slaughter in Ireland is up seven per cent year on year, with overall exports up 13 per cent, which puts their beef in direct competition with UK exports.


“If we look forward to the rest of 2019, both the UK and Ireland have forecast the availability of
prime cattle to tighten up as the year moves on, while lower calf registrations are likely to keep that
supply tighter moving into 2020.

 

“There are also external factors which may have a positive impact on the UK, with African Swine Fever impacting the global protein market and potentially creating opportunities.”


AHDB continues to invest heavily in marketing red meat, both domestically and abroad, with £9.2m
of its budget last year focused in this, in line with a strategy signed off by industry stakeholders.


More in-depth analysis is available on the AHDB website, where you will find further forecast information for beef and all other sectors, with the latest outlooks due to be published at the end of
July.

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