Scotland-Cattle trade.

SCOTLAND-INCREASE IN CATTLE PRICES.

Producers in Scotland and throughout the UK relished 2008 as they have not enjoyed any year since 1995. The fact is that the value of cattle at point of slaughter increased by around 30 per cent and bids for the best animals are now nudging 300p per kg on the hook as compared to little more than 220p in late January 2008.

Supplies in the UK remain tight and the sterling-euro rate of exchange has given the export trade a considerable boost – cull cows at the end of their productive life are now worth up to 40 per cent more.

However, the credit crunch is now beginning to bite and consumers are choosing to buy cheaper cuts of beef while restaurants are reporting that business is particularly slack.

Not even the most optimistic Scottish beef producer expects a further substantial rise in returns during 2009: most would be happy to take last year’s values without too much complaint. Beef, just like cereals and oil, is an internationally traded commodity subject to market pressures. On this front the omens are decidedly mixed following reports from South America that values have crashed dramatically.

When The Scotsman was in Brazil last May, farmers and ranchers were in a highly positive frame of mind despite the fact that Brussels has imposed a ban on most imports from a country that ranks as the second largest producer in the world and one that previously exported over one million tonnes each year.

But that scenario has altered considerably, and may well prove to be a portent of what could happen in the EU. During the first eight months of 2008 ex-farm beef prices were as much as 40 per cent higher than in the corresponding period of the previous year.

However, by the end of December values had declined by 43 per cent from the July high and were just a shade of 20 per cent lower than in late 2007. Losing much of the EU market has clearly been a factor, but Russia has reduced its imports from Brazil substantially in recent months. The fact is that the Russian economy is under severe pressure and international traders are increasingly demanding cash up front before any deals are agreed.

In Argentina where the government has repeatedly intervened to put a brake on exports to satisfy domestic demand, prices have also suffered considerably.