Plan with Care for Year of Beef Opportunity
11/02/05

The 2005 beef market offers excellent opportunities for English producers, according to the latest annual forecast from the English Beef and Lamb Executive (EBLEX). But only to those who time their stock finishing with a careful eye on the market, taking full advantage of the extra marketing flexibility of the decoupled world.

Following last year's 2% rise - mainly as a result of increased final quarter marketings to maximise Slaughter Premium eligibility ahead of its disappearance - EBLEX expects UK prime beef supplies to fall back to just under 700,000 tonnes for the year as a whole.

At the same time, domestic consumption is forecast to remain firm at over 1 million tonnes. And a further decline in beef supplies across Europe is set to increase the EU's annual net import requirement by 150,000 tonnes to nearly 350,000 tonnes.

With an acute shortage of manufacturing beef, in particular, Europe is better-placed than ever before to absorb the 180,000 tonne estimated annual increase in UK production resulting from the potential Over Thirty Month rule change. It would also provide good outlets for any imports displaced from the UK market by the change.

Against the background of a shortage of forequarter beef in the UK, the early 2005 market has, thankfully, regained much of the strength enjoyed over the first seven months of 2004. The sharp fall in beef prices seen from last August, however, provides a timely warning of the price sensitivity of the retail market. It could well also reflect growing consumer concerns over the economy, and suggest the robust retail spending levels of recent years may prove difficult to sustain.

The extent to which dairy and beef producers may hold back older animals from the Over Thirty Month Scheme over the summer in an attempt to improve returns from selling into the food chain after the possible autumn rule change is a further cause for concern over the stability of the market. This stability will, of course, depend on a parallel resumption of bone-in beef exports which, in turn, is dependent on a favourable summer EU inspection of UK BSE controls followed by EU member state agreement.

Under these circumstances, EBLEX stresses that English producers should maintain the greatest possible flexibility in their beef finishing so they can take advantage of specific market strengths as they arise while minimising their exposure to any weaknesses.

In particular, they are advised to plan their systems to avoid having to market large numbers of prime cattle around the time of any OTM rule change. Being able to finish more stock ahead of the change should minimise any market risk. Earlier, faster finishing should, in many cases, also significantly improve carcase quality and cut production costs.