May 2022 Meat Market Report
Food and drink supply markets have been hit by widespread distribution problems and a spike in demand following the return of out-of-home eating and drinking. On top of this, the war in Ukraine has had adverse effects on imports and exports to the UK and the rest of Europe.
GB deadweight cattle prices have continued to rise, building on already record prices. This puts the measure up over 30p compared to a year ago and 72p above the five-year average.
Why are prices rising?
Labour, along with many other costs (including energy) have been rising for some months, only made worse by the Russian invasion of Ukraine. The conflict has also sent feed grain prices, which were also already high, even higher.
Liveweight lamb prices increased again although auction market throughputs were 19% more than during the same period last year when numbers were on the tight side following the UK’s departure from the EU. On the other hand, deadweight lamb prices were steady to slightly weaker towards the end of March.
Estimated slaughter was slightly stronger again, 21% higher than the same period a year ago, again showing relatively good availability. The combination of Easter and Ramadan in April, both traditionally featuring lamb on the menu, will increase demand.
Despite remaining stable in recent months, reports of slightly tighter pig supplies on the continent are giving a feeling that prices could start to rise in the very near future.
Europe continues to have a plentiful supply of pork but across the whole of the EU, supplies of pigs on farms appear to be easing back. This is positive both in terms of processors’ ability to handle them, and possible future price developments. A bottleneck at the point of slaughter (i.e. more pigs than slaughter capacity) has been one of the key pressures on prices over the past six months, in addition to the large supply of pork for consumption. While in Europe this pressure has been slightly eased, in the UK the number of pigs ready for slaughter continues to exceed slaughter capacity, which has been an ongoing problem for the last few months.
Again, the war in Ukraine means we have seen dramatic price increases and shortages throughout the poultry sector. There are many factors as to why there have been increases and shortages. Firstly, Ukraine and Russia supply around 30% of the World’s wheat and grain exports, which has seen over a 30% increase in cost.
EU poultry production has been under pressure of late due to the Bird Flu outbreak towards the end of last year. Millions of birds were subsequently culled, and supply has been tight while producers look to replenish their stocks. The Polish Government have now reduced the exports of poultry, in favour of keeping what they have internal for dispersal amongst their own population as well as the new refugees. Russia normally exports poultry to developing world countries, which has now ceased. These countries are now looking to Europe for supply, and that is leading to more pressure and additional strain on European and the rest of the World markets for poultry. The Netherlands relied heavily on Ukraine for poultry products which are now no longer available. Poland is the largest poultry exporter to the UK, accounting for 20% of all UK poultry imports.
Poultry was on weekly pricing but that has now changed to daily pricing. Due to the lack of imports, pressure is now firmly placed on the UK market.