What will beef prices do in 2023?

Carcass balancing issues caused by strong demand for mince and a battle with poultry and pork could be on the cards for beef in 2023, as consumers remain squeezed.

Analysts say beef could be slightly better equipped than lamb to ride out domestic challenges, as its average price is under £9/kg, compared with lamb, which is at about £12/kg.

Pork averaged £5.50/kg and poultry £4.50/kg in late 2022.

See also: Finished beef prices benefit from holiday demand

But exactly how consumers will behave is hard to call. Some will swap eating out for eating in and support British farmers through a retailer.

Some may swap supermarket, while others might swap protein or switch to a cheaper cut or brand to save money.

Consumer price inflation is likely to have peaked at 11% and is expected to drop to 5% in the final quarter of this year, says the British Chamber of Commerce.

Structural change

Stars aligned in 2022 as beef farming’s ageing workforce, diminishing subsidies and exit payments combined with fertiliser, fuel and feed costs to make some suckler systems unsustainable.

This forced herd downsizing and dispersal before winter. Massive cull cow entries at live markets and processors followed.

Time will tell whether this helps beef prices by contracting supply, or simply makes room for the rising amount of dairy beef in the system.

Many expect continental-bred suckler calves to tighten in supply, which some say should hold up prices at this year’s autumn sales and into 2024.

Farmers Weekly asked Iain Macdonald of Quality Meat Scotland, independent consultant and farm economist Kevin Bevan and Neil Shand of the National Beef Association for their assessment.

Reasons to be cheerful

• Beef prices held through the autumn despite a 2% increase in UK production this year, largely from more cull cows being slaughtered. Furthermore, Ireland’s cattle slaughter increased by 8% for the first 11 months of 2022. This shows some resilience in the beef price.
• Calf registrations from 2020 to quarter one 2022 suggest lower domestic beef supplies late in quarter four of 2023 and early 2024.
• Falls in beef price should be limited by tight EU and global supplies. EU forecasts are for a 1.8% contraction in beef production, making imports less competitive, particularly if a weak pound persists.
• Tight European production and ongoing contraction in the US beef herd, amplified by drought, is lowering northern hemisphere production. The US is the world’s largest beef producer and second largest importer (largely lean manufacturing beef for burgers), but is also a major exporter of premium cuts such as steak.
• Although some countries, notably Brazil, are forecast to lift production, Rabobank forecasts a tighter beef supply picture until 2026.

Pressuring profit

• Total global protein supply will be up next year, say Rabobank analysts, which means more competition from cheaper products.
• High mince demand and limited steak sales could pressure higher value cuts, as carcass balancing issues arise and consumers continue “trading down”.
• Finisher margins have been squeezed by costs, meaning store prices have not kept pace with prime beef trade. 
• In England, 2023 Basic Payment Scheme payments will be 35-55% lower than 2020 rates, depending on payment band, pressuring cashflow and business profits. The further cut in area support, along with any drop in store cattle prices driven by pressure on finisher margins, could further threaten upland suckler production.

Ones to watch

• The UK has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and is negotiating free-trade agreements. These could create opportunities for British beef, but will face competition from Australia and New Zealand.
• If the UK implements border checks agreed as part of the Brexit trade agreement, importing beef from the EU will be more difficult. However, the Irish processors that deliver much of UK beef imports are well organised.
• If the UK-Australia free-trade deal is ratified, as expected, the Australians may target deliveries at the premium restaurant trade.
• Businesses that can reduce reliance on manufactured fertiliser will insulate themselves from an input cost that is expected to remain high in 2023.
• Understanding your cattle buyer could be more important for calf and store producers. Some say rising commodity prices and the use of technology, genetics and forage will see continued growth of a two-stream finishing system, with a short, high-energy feedlot-style finishing system alongside a longer-term, grass-based system.
• The Ukraine/Russia conflict has elevated cereal prices (total costs are up to £4/day on a 100-day finishing period). If the war eases, there could be relief to fuel and cereal prices.
• The high cost of milk powder and concentrates is hitting the economics of rearing dairy beef calves. A drop in milk prices may, at least, offer some easing of powder costs.