Tight global picture suggests £5/kg beef price could stay

Beef finishers paying £3/kg or more for short-term stores will draw optimism from a levy board outlook tipping tighter global supply to temper higher domestic production this year.

Analysts at Hybu Cig Cymru (Meat Promotion Wales) say beef producers should gain confidence from market drivers in their latest beef outlook (PDF).

See also: Factories could struggle to contain £5/kg beef price

This will be welcome news to businesses which have bid £1,700-£1,800 a head for finishing cattle in recent weeks and £1,200-£1,300 for grazing cattle under 380kg.

Thainstone market reported a store steer average of 317p/kg last week (7 April).

However, HCC analyst Glesni Phillips stressed the picture was complex, and listed the following positive and negative market drivers detailed in HCC’s report:

Upsides

• Cull cow prices and mince demand is likely to remain strong through the cost-of-living crisis.
• Long-term forecasts (animal 0-12 months) show a 1% tightening in cattle.
• High feed prices and tight forage supplies mean animals are leaner, so abattoirs must still compete for cattle.
• US production is forecast to be down by 6.5% this year at 12m tonnes and global production is back by 0.3% overall

Downsides

• Domestic consumers are “feeling the pinch”. The proportion of cheaper mince products (historically at 50%) is now 54%
• Farm input costs have eased slightly, but are still historically high.
• Domestically, there are 4% more cattle (11,300-head) this year in the 12-18-month age bracket, meaning volumes to slaughter should be higher this year.
• Brazil (+2% to 10.6m tonnes) and China (+3.2% to 7.3m tonnes) are expected to see a significant rise in beef production in 2023, says the US Department of Agriculture

Ms Phillips said that, while 2023 looked challenged by the cost-of-living crisis and cattle population data suggesting a short-term increase in beef production, the global outlook was positive for the next 18 months.

“Production may be set to increase somewhat in GB and some other countries such as Brazil and China in 2023,” said Ms Phillips.

“But this is offset by likely reductions in output of Europe, including Ireland, and significant fall in the amount of beef produced in the US.”