Irish beef prices have been slowly creeping up over recent weeks with the strength of the British market the main driver.
Last week, the average R3 steer price was the equivalent of €4.65/kg, 79c/kg ahead of the Irish price of €3.86/kg.
Supermarket demand has been driving the British price in recent months due to lockdown but with the reopening of the hospitality sector starting next week, demand will increase for imported beef, three-quarters of which is Irish.
It is less positive in the main export markets in the EU that Ireland supplies, with outbreaks of COVID-19 causing further lockdowns and therefore restricting the demand for imported beef further than it has already been.
Wider global trade
Farm-gate beef prices have been rising in the main beef-exporting countries around the world. This is driven by tighter supply, particularly in Australia and a prediction of lower supplies in Brazil, combined with an ongoing increase in demand from China.
Supermarket demand has been driving the British price in recent months due to lockdown
The USDA has been forecasting that Chinese beef imports would level off this year after a decade of exceptional growth making it the market for 20% of globally traded beef.
However, the recent import data from Chinese customs puts beef imports 100,000t higher at 398,000t for the first two months of 2021.
There had been some disruption to trade in China during this period last year because of COVID-19 but, even with that, beef imports were up on the 210,000t imported in January and February 2019.
That makes Chinese imports so far in 2021 almost double what they were in the same period in 2019.
Chinese beef demand
Based on this, it suggests that the USDA may have underestimated Chinese beef demand for 2021 but it will be necessary to see if this trend is continued over coming months.
However, with the Chinese economy being one of the few in the world that is growing at present having brought COVID-19 under control, there are reasons to be optimistic.
The other major factor setting price is supply. Brazil is the world’s top exporter of beef at 2m tonnes in 2020.
Cattle prices in Brazil have surged over the past year from BRL 12.80/kg in April 2020 to BRL 20.70/kg this week, a 62% increase. The current equivalent euro price is €3.11/kg based on the current exchange rate but if the exchange rate was at the level it was at this time last year, the equivalent price would be €3.71/kg.
Brazilian prices are expected to hold with the strong demand from China underpinning the market.
Australia, which along with the US is next biggest global exporter of beef, is in the middle of herd rebuilding and beef supplies in 2021 are expected to be at their lowest this century. This is reflected in exceptional farm-gate prices and even though they have dropped back recently, MSA steers are the equivalent of €4.38/kg.
Australia is the biggest supplier of manufacturing beef to the US and is running at just over half the volume for 2020 and values of very lean forequarter beef are the equivalent of 58c/kg more than this time last year.
If the combination of tighter supplies and increasing demand is maintained in the coming weeks and months, it suggests a positive outlook for Irish beef prices.