Whats causing the unforeseen rise in Irish beef price?
In January of this year, the mere notion of an Irish beef price at 4/kg base would have been laughed at by most farmers and seen as wishful thinking. Turn the clock forward six months and quotes this week were at 4.30/kg and rising for heifers. Many farmers are currently asking: What is causing the current rise in beef prices?  Speaking at the Bord Bia Meat Marketing Seminar  Mid-year Market Outlook, yesterday, Thursday, July 8, Bord Bias beef sector manager, Mark Zieg, gave his insight on developments in 2021 to date, and an outlook on the beef trade for the rest of year. The first quarter  Zieg noted that 2021 initially experiences a subdued beef trade due to the impacts of Covid-19. He explained: High levels of beef was shipped in final weeks of last year. This meant there was a lot of stock in countries like the UK, where Irish beef exports up to April [were] down 30%. Trade and prices were somewhat subdued in the first quarter of the year as a result of this.  Continuing, the beef sector manager explained: From there, we have seen relatively strong growth in the market demand and relatively tight cattle supplies, with latest Irish prices at 4.22 against the European average of 3.86. The current beef price is at an eight-year high; we havent seen prices at this level since 2013. That is reflected in our prime Irish composite price versus the prime export benchmark. This is the Irish price compared to the price levels that are in our key markets, he added. For 2020, we were practically on a par, just slightly ahead of that benchmark with our actual Irish price. For this year we are a full 10c/kg ahead for the latest week, and picking up on that difficult trade we had for the initial months.  Factors causing Irish beef price rise  Zieg noted that a very strong live export market added further pressure to the supply end of the beef trade with live cattle exports increasing by 7%. He acknowledged that a drop in live exports was seen in key markets such as the Netherlands, but outlined that growth was experienced in markets such as Spain and Italy. The key one for the beef trade is that very strong trade to Northern Ireland with almost 40,000 live cattle exported for a short finish or direct slaughter.  Zieg emphasised: With Northern Ireland, you can see a very strong growth trend there for the last three years, and that is having an impact on cattle numbers here. Advertisement  He added that the northern demand, coupled with more cattle being killed late last year and lower births in 2019, have all combined to create a tightening of supply. Reduced kill  The Bord Bia beef sector manager drew attention to the fact that almost 60,000 less cattle have been processed in Irish factories compared to last years figures. Cattle numbers are tight at the moment and this is the case across Europe. Bord Bia has predicted this years year total kill in Ireland to come in at approximately 1.69 million head of cattle. This is a forecasted drop of 110,000 head less cattle to be processed in Irish factories this year. However, Bord Bia estimates the first half of next year will see more cattle gradually coming through the system. Lower carcass weights  Zieg also highlighted that lower carcass weights are being recorded with the average coming in at 3kg/head less on heifers, steers and cows and 6kg less on young bulls leaving lower volumes of beef being processed per head of cattle. It was outlined that the same trend is being seen in key European markets. Kills are projected to drop by 5% in the UK and 2% across the EU. With less cattle being killed across Europe, further pressure is being put on supplies. Retail sales  It was noted that retail sales have slowed in the last 12 weeks with volumes down 2% in Ireland and almost 8% in the UK, mainly due to the easing of Covid restrictions. However, this reduction comes following a 20-30% growth in retail beef sales last year, therefore leaving retail sales still 7% higher than 2019. Concluding, Zieg expressed optimism for a strong Irish beef price into the back end of the year. He described the current market situation: Strong EU and Irish beef sales coupled with tight supplies across Europe and globally, as well as increasing confidence in the economy and a strong international demand.