Weather-related difficulties have severely affected Irish livestock farmers during 2018. The combination of a long winter, a late spring and prolonged summer drought in many areas have greatly increased production costs.

Impact on prices

At market level, prices have been slightly ahead (+1.3% or €0.05 per kg) of last year’s levels, for the year to-date. Irish R3 steers achieved an average prices of €3.93/kg deadweight, excluding VAT, since the beginning of the year. Prices increased steadily during April and May, and reached €4.12/kg at the beginning of June. However, prices then began to fall off sharply: much earlier than the usual seasonal pattern which arises during most years. Since early August, prices have stabilised at around €3.83/kg (excluding VAT), a decline of almost €0.30/kg from their peak in early summer.

This trend in producer prices reflected some instability across the main markets for Irish beef. In the UK, cattle prices also declined significantly earlier this summer but have begun to recover in recent weeks. Most recently, R4L steers in Britain increased by £0.04/kg to £3.76/kg, which is equivalent to €4.16/kg (excluding VAT). The euro is presently valued at 90p sterling, which is very similar to September 2017.

Across continental Europe, where most Irish beef is exported, after the UK, cattle prices have been well below last year’s levels. R-grade young bull prices are currently €3.66/kg in France, €3.74/kg in Germany, €3.94/kg in Italy and €3.83/kg in Spain, such that the average continental EU price equates to €3.74/kg (excl VAT). In many markets, consumption of red meat was severely affected by the exceptionally hot weather which prevailed for much of the summer.

This impact was further compounded by higher cattle supplies across northern Europe, with the drought conditions causing farmers to increase culling rates and to market prime animals earlier but at lighter carcase weights.

In Ireland, cattle supplies at meat plants have been 3.4%, or 37,000 head, above 2017 levels. To-date this year, throughput of steers has fallen by 1.8%. However, numbers of heifers and cows slaughtered have both been 5% higher, while young bulls also increased by 9.3%. Some further increase in throughput is likely over the coming months, with overall supplies expected to rise by 50,000 to 60,000 head for the year, as a result of both additional cull cows and prime cattle. However, these additional supplies will be offset to a large extent by lighter carcase weights. For example, steer and heifer carcases were 8kg lighter, on average, during July this year than 2017. More significantly, the average weight of cow carcases declined from 317kg to just 302kg.

Following the opening of the Chinese market in April and the subsequent trade mission to China led by Minister for Agriculture, Food and the Marine Michael Creed, the six listed plants have been actively responding to vigorous demand from the online and foodservice sectors.

Within the last 30 years Chinese demand for meat has quadrupled, and the country now consumes one-quarter of the world’s meat supply. On average, Chinese beef consumption per capita is 4kg/year, compared with average Irish consumption of 19kg/year. However, consumer demand for premium imported beef is forecast to rise significantly, driven by increasing urbanisation, higher disposable incomes and health awareness.

Last year, Bord Bia secured a contract to promote EU beef and lamb in China. Irish beef exporters will benefit from this campaign as they develop these markets. Already the first Irish companies approved for exporting to China have successfully landed their first exports and expectations are that this market will grow from here.

Overall exports of live cattle have risen by more than 28% to date this year, reaching 190,000 head. Calf exports have been the most significant category, growing by over 48% to 148,000 head. The Spanish market has been of particular importance, with 70,400 head of Irish exports there so far: a 50% increase. Bord Bia recently visited several major customers for Irish livestock in the north of Spain, including importers and feedlots. While, similar to recent years, the majority of cattle exported have been Holstein Friesian calves, there has been a growing demand for Angus-cross animals as the Angus brand is becoming increasingly well recognised and sought-after.

With the seasonal increase in availability of Irish weanlings, over the coming months exporters are likely to focus on Italy, Spain and international markets.