Scottish prime cattle prices have started the year 4% lower than at the start of 2018, with the wider European beef market also down around 3% in Euro terms.
According to the latest market commentary from Quality Meat Scotland (QMS), Irish prices are 6% lower than last year and bigger falls are reported for Spain and France - the countries with the two largest cattle herds in Europe.
Current prime cattle prices in the United States are reported to be unchanged on the year but on lower throughputs.
Australian producers, in contrast, have seen prices firm in the final couple of months of 2018 and, despite dipping through late December and into January, are 10% higher on the year.
However, because of drought conditions, slaughterings over the first ten months of 2018 were around 10% higher than in 2017 and prices reached a low point during August - 20% lower than they currently are, QMS said.
Stuart Ashworth, QMS Director of Economics Services said: “As 2018 drew to a close, volumes fell back towards more typical levels and going into 2019 are expected to fall below the long run average,” he added.
Brazilian producer prices have also started 2019 slightly higher than they started 2018 but, when considered in Sterling, they have fallen slightly as have Argentinian prices.
According to Mr Ashworth, the June 2018 census across Europe reported a decline in the breeding cow herd with dairy cow numbers down 0.5% and beef cow numbers down 1.4%.
“Only Spain, out of the five largest European beef herds, showed an increase in numbers. France, the UK, Ireland and Germany all showed declines,” said Mr Ashworth.
“A smaller breeding herd points towards lower production in the coming months unless further decline in the herd occurs,” he added.
Scottish calf registrations dipped by 0.25% in 2017 and in the 11 months to the end of November 2018 had fallen a further 2.5%.
“The volume of prime beef produced in Britain would only be maintained if carcase weights were to rise but even then as the year progresses production is likely to decline,” said Mr Ashworth.
Cow slaughterings across the UK ran ahead of last year’s levels until November 2018 and, according to Mr Ashworth, it seems unlikely that these volumes will be maintained through 2019 unless further decline in breeding stock numbers is to occur.
“Consequently, it seems likely that British and European beef production will fall as we move through 2019. Similarly, Australian production is expected to fall,” said Mr Ashworth.
“This may not though be enough to support farmgate prices, as the USDA does, however, expect some growth in production in the United States, Brazil and Argentina. The global supply may then hardly change.”
Furthermore, a sharp decline in cattle hide prices due to a slowdown in global demand for leather combined with a global increase in cattle slaughterings particularly in the second half of 2018, has weighed heavily on cattle prices.
An extremely competitive retail market for meat both in respect of price and volumes will also constrain farmgate prices.
In the 12 months to the beginning of November 2018, Kantar World Panel data showed UK beef purchases for home use falling 2% in volume terms and 1.5% in value terms.
Official National Statistics (ONS) report the average consumer price of beef in November 2018 was 1.4% lower than a year ago, with rump steak the only cut to maintain its retail value. Lower prices therefore had not stimulated demand.
The retail price for beef is also lower than a year ago in Ireland, although across Europe as a whole, the retail price of beef is 1% higher than a year ago.
According to Mr Ashworth, Europe does, however, forecast stagnation in beef consumption through 2019 but only through static or falling prices.
“Growth in beef consumption is likely to mainly come from developing countries and in a European context, there has been growth in exports to North Africa and the Middle East,” said Mr Ashworth.
“Other growth opportunities are also expected in the Pacific Rim,” he added.
