Rising calves prices ‘something of mixed blessing’

WHILE cattle producers are currently benefiting from strong prices in the calf sales, a leading economist has described this as “something of a mixed blessing for the red meat industry”.

Stuart Ashworth of Quality Meat Scotland admitted the continuing strength of the store cattle market might be welcomed by sellers as a means of restoring their bank balances after the costly past 12 months. However, he was concerned about the underlying reasons for the improved prices and the longer-term effect they would have on Scotland’s beef industry, particularly in relation to the industry potentially benefitting from the opportunities created by a growing UK and global population and improving economic outlook.

Ashworth said: “The volume of 12- to 18-month-old store cattle sold by price-reporting auction markets during the past month shows a 15 per cent reduction in numbers and a 12 to 15 per cent increase in prices, compared with the same period last year.

“This reduction in volume may be larger than was perhaps expected but is a reflection of the higher volumes sold earlier in the year as store producers faced slow grass growth and dwindling feed stocks in April and May.”

The more worrying factor, according to Ashworth, was the overall reduced numbers of beef sired calves now being produced in Scotland.

Scotland has not been alone in seeing fewer beef calves being produced, with Ashworth saying the same scenario had been repeated in the north of England, one reason why Scottish auction markets are seeing more English buyers coming north to buy cattle.

In contrast to the store trade for cattle, those selling store lambs have faced poorer prices.

Over the past few weeks ,store hill lambs have been typically trading £4-£5 per lamb lower than last year and cross-bred store lambs have also been trading lower than 2012. The volumes marketed through the price-reporting auction sales have reflected the season and been lower than last year, particularly for hill lambs.

“The long-term prospects of demand, for both beef and lamb, are set to benefit from a growing UK and global population, improving economic outlook and reduced volumes of stock on the market,” said Ashworth.

“So why have the two store markets responded differently this autumn? The answer may lie in the relative strengths of the current finished livestock prices and movements in feed grain prices, with the reduction in feed grain prices being more significant for cattle finishers.”

Because the UK 2013 lamb crop is widely acknowledged to be smaller than last year, Ashworth said this should result in greater competition among buyersL “However producers have watched the lamb price slide over the past eight weeks and, mindful of last year’s price behaviour, remain cautious.”

He added there was also a nervousness about the New Zealand lamb crop and the volume of lamb that might be delivered into the UK market in early 2014.