The EU beef market is increasingly separating into a premium and ground beef market with divergent price developments.
Prime beef will remain at elevated price levels due to pressured availability, recovering food service demand, and growing quality awareness among consumers and in retail. These prices resulted in recovering steer and heifer prices from Q3 onwards.
In contrast, ground beef prices are under pressure due to lacklustre demand, declining popularity of fast food restaurants and growing supply from dairy-based beef.
This has led to a widening price gap between young bull/cow prices and prime beef prices. This trend will continue in 2015, with the combined factors of the
abolition of the dairy quota by April 2015 and the new CAP supporting growing dairy production at the expense of prime beef. The latest cow herd data (June) show suckler cow numbers declining by an other 1% compared to 2013 numbers and dairy cow numbers increasing by 1.7%.
Within the EU, especially in Italy, production is under strong pressure, with slaughter volumes down 18.9% (Jan-Aug) after the 12.8% decline over 2013. The limited profitability in beef farming will see Italian beef farmers increasingly move into dairy production.
This is evidenced by the development of the suckler cow herd, which declined by 137,000 head (-26%) since its last peak in 2008, while the dairy cow herd increased by 210,000 head (+13%) in the same period
