The prices Scottish producers are receiving for prime cattle remain 6-7% higher than this time last year, according to Stuart Ashworth, Quality Meat Scotland’s head of economics services.
This price improvement is significantly ahead of the situation in England and Wales, where the year-on-year improvement is much less at around 2-3%.
But Scottish and UK prime cattle prices continue to drift lower, continuing a trend which, aside from a small seasonal improvement in early December, began in October.
“Contributing to this slide in price has been a modest improvement in the UK and Irish cattle supply since Christmas,” observed Mr Ashworth.
“Although Scottish price-reporting abattoirs have handled a similar number of cattle over the past fortnight to the same period last year, English and Welsh abattoirs have handled 4% more cattle.”
With carcase weights currently higher than last year, prime beef supplies have increased further.
But total beef availability remains lower than last year because of a reduction of more than 10% in the number of cows and mature bulls reaching UK abattoirs.
Irish abattoirs have also seen cattle availability in mid-January increase, by more than 10% on last year.
“Although the Irish trade has been flat for the past month or so, Irish steers and heifers are trading at prices 2-3% lower than last year while young bull prices are 6% lower,” said Mr Ashworth.
“Scottish and indeed GB cattle then continue to trade at a significant premium to the Irish market.
“The differential has been particularly wide since mid-2013 and currently stands at about 18-20%. Historically the premium has stood at about 10-13%.”
Across Europe prime cattle prices are currently 3-4% lower than last year while production has remained little changed, a scenario which implies demand pressure driving the market.
“However, a closer look also identifies a reduction in EU exports particularly from Poland, where producer prices are currently some 10% lower than a year ago and where a change to slaughter rules mid-year badly affected their exports outside Europe.
“This change in export activity has left more product on the EU market at the same time as retail demand remains fickle.”
The relative regional price movements mean that Scottish and UK beef is less competitive, and indeed trade data suggests that UK beef exports declined in the final quarter of 2013, while at the same time imports from Ireland increased.
This changed trade balance has also contributed to the pressure on UK producer prices, with the greatest pressure placed on cull cows which, despite lower availability, are trading at prices some 10% lower than last year.
“Cattle availability in the UK and Europe however remains finely balanced,” said Mr Ashworth.
“The UK June census reported an increase of 2% in one- to two-year-old cattle, followed by a decline of over 3% in under one-year-old cattle, and so the modest improvement in current cattle supplies is likely to be short lived.”
The Irish June census reported a 9% increase in one- to two-year-old cattle followed by a decline of 3% in under-one-year-old cattle.
“While exports of live cattle from Ireland did increase significantly in 2013, the real growth was in the number of calves exported rather than stores or weanlings.
“Since this is likely to have little short-term impact on Irish supplies of finished cattle, the improvement in supplies will last longer than in the UK.”