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Stackyard News Aug 09

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Future Beef Cattle Supplies to Remain Tight

Higher heifer slaughterings in the first six months of 2009 are expected to continue over the second half of the year, adding to the further downward pressure on the UK breeding herd and keeping domestic beef supplies particularly tight in 2010, reveals the latest market outlook from EBLEX, the industry body for beef and lamb levy payers.


Higher heifer slaughterings in the first six months of 2009 are expected to continue over the second half of the year

Heifer slaughterings some 6% up on the first half of 2008 have more than offset the expected decline in steer and young bull marketings so far this year, leading annual beef production to remain at around the level of last year rather than falling to the levels originally forecast.

Providing sterling/euro exchange rates continue to remain favourable these trends are not expected to lead to any sustained undermining of the strength of the beef market seen in the first half of the year. Especially so since there is now no prospect of Brazilian beef returning to Europe to any great extent in either 2009 or the first part of 2010.

Higher current season heifer slaughterings are, however, forecast to add to the contraction of the national beef breeding herd, now expected to be around 2.5% in both 2009 and 2010. At the same time, continuing structural change in the dairy industry – not helped by this year’s sharp fall in milk prices – is anticipated to lead the annual decline in the dairy herd to accelerate from 2.5% this year to 2.7% next.

Indications of greater beef breeding through AI on many dairy units may help reduce the impact of the dairy herd contraction on dairy beef supplies but this is only expected to have a marginal effect on the overall market given the scale of the national breeding herd reduction.

Equally, the volume of cow and adult bull slaughterings for the beef chain following the relaxation of BSE controls is now considered to have peaked, and supplies from these sources are forecast to fall back slightly in the current year and then progressively in line with the breeding herd decline from 2010.

Although beef consumption is predicted to fall back somewhat at home and in our key export markets as the recession tightens its grip, this is also seen as unlikely to affect the overall dynamics of the market going into 2010 in view of the very much tighter supplies; always supposing the sterling:euro position maintains export demand and prevents increasing imports from Ireland in particular undermining prices, that is.

Under these circumstances, EBLEX foresees a generally favourable market balance between supply and demand from a producer perspective in the year ahead. It does, however, warn everyone to anticipate particular volatility in currency market-driven returns and strongly advises producers to maintain the tightest possible cost control to protect themselves from the effects of short-term exchange rate fluctuations and ensure their systems are as sustainable as they can be for the future.

link Hillview Herd Wins EBLEX Award for Stabiliser Breed
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