As detailed in the Irish Farmers Journal recently, Bord Bia conducted an in-depth price benchmarking exercise which analysed all of the prices paid by Irish meat plants and compared these with the prevailing carcase prices across the major export markets. This review highlighted the significant weakening that has taken place over the past two months: not just in the prices being returned here in Ireland, but also in the UK and continental Europe.

When the prices were averaged for the year up to mid July, the composite cattle price in Ireland, or average price that producers received across all categories and grades, was €3.45/kg (excluding VAT), which was just slightly behind the Export Benchmark Price of €3.50/kg, averaged over the same period. The Export Benchmark Price equates to the average price that Irish producers would theoretically receive, if their cattle were priced according to the prevailing carcase prices across the major export markets.

Supplies

For the year to-date Irish cattle supplies have been 4.4% or 44,500 head above the equivalent period in 2018, at just over 1m head. In particular, supplies of young bulls and heifers have risen by 14% and 11%, respectively. In addition, average carcase weights have recovered by 1.5% or 5kg on average in comparison with last year. The higher availability, combined with heavier carcase weights, mean that output volumes have risen by almost 6%. Looking forward to the autumn, cattle supplies are expected to fall below last year’s levels. AIM figures for 1 June showed a decline of 56,000 head in male cattle aged between 12 and 36 months. As a result of this anticipated tightening, national throughput is likely to be very similar to 2018, at approximately 1.8 million for the year.

Production of beef has also been higher than expected in some of Ireland’s important export markets. The UK in particular has seen higher cattle throughputs, as farmers there have been marketing their animals earlier in response to Brexit uncertainty and falling market prices. For the year to-date, EU beef production contracted by just 0.2% as a result of increased carcase weights and sluggish live exports to Turkey, whereas earlier forecasts had suggested a decline of 1.7% was likely for 2019.

Demand

Bord Bia supplied a table showing estimated export volumes from the CSO for the year to-date. Significantly, exports to the UK market show a decline of 9.4%. This trade reduction is also verified by the AHDB’s statistics, which reveal a 10% decline in overall imports of beef to the UK. There are several contributing factors to this reduction, including higher beef stocks being held on the market since the beginning of the year, as well as reduced sales both at retail and restaurant level, largely as a result of economic uncertainty. On account of higher Irish production, combined with fewer opportunities in the UK, Irish exporters have been increasingly focused on continental Europe and International markets. Exports to well-established EU markets such as Germany, the Netherlands, Italy and France have all recorded significant volume growth. This was despite slightly lower beef consumption rates reported across Europe to-date this year.

Growth in external markets

For the first five months of 2019, Irish beef exports into international markets have increased three-fold in comparison with the same period last year. While the Philippines and Hong Kong accounted for most shipments to-date, China imported almost 3,000t of Irish beef. To-date, just seven plants have been approved to supply the Chinese market, which requires frozen boneless beef from cattle aged under 30 months. With North American cattle prices now exceeding those in Europe, the US has also become an attractive destination for Irish beef, taking more than 1,300t.