January 2022 Meat Market Report
Last week, the GB deadweight all prime average dipped 2.6p, to 409.2p/kg. Although this is a week-on-week decline the measure remained 38p above year-earlier levels and well above the 5-year average. There were declines across all the overall prime reported prices. Estimated prime kill dropped 6% on the week to 29,400 head this figure is 13% below numbers recorded a year ago. Availability of prime cattle is tight currently reflecting the calving conditions of 2018, and higher than expected slaughter last year.
For cows, the overall average price rose by 3.2p to 255.1p/kg. This was the first weekly price rise for about four months, putting the measure closer to where it was two weeks ago, and 33p above the same week a year ago.
Slaughter of cull cows at GB abattoirs was estimated to be 12,900 head for the week, down 5% from the week before, but 2% greater than the same week a year ago.
Irish prime cattle throughput is also running slightly lower, dropping by -3.1% on the previous week and -6.4% head on the corresponding week in 2020.
In Ireland, a total of 1,574,691 animals have been processed for the first 48 weeks of 2021. This figure represents a decline of 78,768 head on the corresponding period in 2020, which equates to a 4.8% drop.
European markets are still strong with numbers on the ground tight and labour issues, new covid restrictions and transportation problems are causing disruption and tightness of supply to the UK. Labour issues continue to hinder total throughputs here in the UK and throughout Europe.
The GB liveweight new season lamb SQQ rose by 1.2p to an average of 278.7p/kg. This put the measure 61p above the price recorded for the same week a year ago.
Throughput of new season lambs at GB auction marts was estimated to be 135,100 head, up 12% from the week before, but still 8% behind numbers recorded a year ago.
On the deadweight front, the GB SQQ enjoyed an 18p increase last week averaging 618.6p/kg. This was 140p above the price recorded during the same week a year ago. Industry reports suggest that strong demand for store lambs is benefitting finished prices.
Estimated slaughter of new season lambs stood at 236,800 head, up 2% week-on-week but down 14% from the same week a year ago.
According to the latest Defra data, 1,121,600 head of lambs came forwards during November. This is 11% fewer than a year ago and 10% down on the 5-year average. Meanwhile, ewe kill for the month was recorded at 87,300 head, down 22% on-the-year. Just under 90% of UK sheep kill takes place in England and Wales, and therefore naturally much of the decline can be attributed there.
Irish lamb prices have been on the up all year and for the first 48 weeks of this year, it has seen a 27% increase.
The lamb crop in New Zealand has increased slightly on the year, to 22.7 million head, according to Beef and Lamb NZ. Over the coming New Zealand production year, a total of 18.48 million lambs are expected to be slaughtered, up 1%. In recent years, New Zealand’s exporters have increasingly turned their attention to the large and valuable Chinese market. We expect this trend to continue next year.
Markets in the Middle East and China are paying high prices for less onerous specifications which is important for the plants due to changed working practices (Covid induced) and labour shortages. Therefore, other markets are more attractive.
Due to the changes brought about by the UK leaving the EU, importing New Zealand Lamb from the Continent is no longer economically viable meaning gaps in supply can’t be filled at short notice.
The Sterling exchange rate has dropped over the last few weeks making the costs even higher.
Finished pig prices continued to fall last week, with the EU-spec SPP dropping to 141.81p/kg.
At 186,200 head, the estimated throughput was 4% lower than the week before and 6% below this point last year. The average carcase weight stood at 91.90 kg, like last week but over 4 kg above 2020 levels. These high weights show that producers continue to face difficulties with backlogs of market-ready pigs on farms.
The UK’s export performance continued to falter in October. Fresh/frozen pork shipments were down compared to both September (-5%) and October the previous year (-45%), at 13,500 tonnes.
Pork shipments to China were barely over 4,000 tonnes, just a third of last year’s level, and the lowest volume since December 2018.
Exports to the EU were also down 35% to under 7,000 tonnes. Falling Chinese demand has led to oversupply within the EU and low prices, meaning UK product is uncompetitive. Ongoing effects of Brexit are also probably still playing a role.
Shipments of bacon, ham and sausages also recorded declines. Offal exports weakened too, with October’s total of 9,700 tonnes 12% lower than last year, although this was still higher than the September volume. The decrease was largely down to lower shipments to China (-35%). All in all, the weaker Chinese market has significantly depressed our export prospects, alongside those of other global pork exporters.
Industry reports increasing expectations of a decline in pig availability as we progress through 2022.
The latest reports from the National Pig Association suggests the sow herd could drop by around 25,000-30,000 sows this year. Some tightening up around springtime may also be possible, depending on how many producers have taken out younger pigs.
Some increase on certain poultry items could escalate over the coming weeks with news of avian flu escalating. The UK is in the grip of “the worst bird flu outbreak we’ve seen”, according to British Poultry Council CEO Richard Griffiths. Griffiths’ assessment came on the heels of the government’s chief vet Christine Middlemiss saying that the country was seeing a “phenomenal level” of avian influenza. Middlemiss commented she is “very concerned” about this year’s outbreak, which had been driven by high levels of infection in migratory birds.
Some 500,000 affected birds had already been culled, with cases at 40 premises now confirmed across the UK, she added. Given the worsening conditions, the poultry sector is now scrambling to prevent the outbreak from getting worse. “Our focus is all around the stamping out of the virus and curbing the spread of it,” said Griffiths.
Similar stories from around Europe, the French government has put the entire country on high alert for bird flu as the virus spreads across Europe. Dutch authorities last week ordered commercial farms to keep all flocks inside after bird flu was reported on a farm.
One of the largest chicken and food producers, who process over 10 million birds a week in the UK, the Netherlands and Poland, and supplies a third of all the poultry products eaten in the UK every day have a serious labour shortage with a 15% labour shortage this year in its 16,000 workforces.
We will be keeping a close eye on the poultry situation.
Meat Costs Under Pressure
There has been a continuous rise in input costs for food producers. The food sector has suffered major hits with ingredient inflation. Feed inflation is at an 8-year high. Wheat, soya, cure ingredients, seasonings, sausage casings and other components have risen by more than 50%; packaging is up by 20% and energy costs are up 30%. Some food sector items, such as stainless-steel equipment, have doubled in price, fuel and transportation costs plus wage inflation is now way more than annual increases. This is putting major pressure on all products.