Irish cattle prices are trading at a base of €4.12/kg to 4.15/kg, 12c/kg to 15c/kg ahead of this time last year. It is also a strong beef market, in particular for manufacturing or grinding beef. This means factories are not building up stocks and prices are very much market driven rather than a shortage of supplies.

A combination of reduced supplies in Australia along with continued growth in demand in Asia, means demand for manufacturing beef is on par with four years ago in the aftermath of the horsemeat incident. Then the UK market in particular was driven by a need to verify the integrity of supply lines, now global markets are driving the trade.

Farm gate prices in the US were at the equivalent of €4.37/kg at the end of April. This is 45c/kg higher than a year ago, though still behind the drought-driven peak of €5.31/kg in March 2015. Australia is trading at the equivalent of €3.58/kg, 7c/kg higher than the same week last year though down on the peak of €3.83/kg in February this year. Even Brazil, despite its problems in March, is performing 12c/kg equivalent ahead of the same week last year.

In our main export markets, Britain is performing strongly at the equivalent of €4.23/kg this year compared with €3.99/kg equivalent at the end of April 2016. France is trading at €3.72/kg for R3 young bulls, 12c/kg ahead of last year, while Italy is the only market that is lower than a year ago at €3.94/kg for R3 young bulls compared with €4.05/kg in the same week last year.

What is driving prices?

Growth in demand in China is mopping up beef from across the major exporting countries of the world. In 2013, China imported just over 400,000t of beef; this year, the USDA is forecasting that this figure will increase to 900,000t. That increase over the five-year period is almost the equivalent of Ireland’s total production and will put China ahead of Japan as the world’s second-largest importer of beef after the US.

On the supply side, the dramatic change is in supplies available from Australia, where herd recovery is ongoing after drought led to record supplies of 1.3m tonnes of exports in 2015. This fell 300,000t in 2016, more than Ireland’s total exports to the UK and their exports are down a further 15% to 283,000t so far this year.

That means they are sending less to all Asian markets except China and Ireland has stepped in to increase sales to Hong Kong and the Philippines for lower value trimmings in particular.

Supplies have increased over the past 18 months in the US, the reduced supplies from Australia are acutely felt. In 2016, Australia exported 416,000t to the US market, which fell by 154,000t in 2016 to 264,000t. There is a decline of 30% in Australian exports to the US so far this year, with just 65,000t shipped. That has created a deficit in the US market for manufacturing beef, with lower-value higher-fat trimmings in particular demand.

Markets in detail

The most interesting market at present is the US, in particular for high-fat-content (50%) trimmings which have experienced hyperinflation recently. A year ago, according to USDA figures, the market was paying between $0.52/lb and $0.55/lb (€1.02/kg to €1.09) while last week it was paying between $1.79/lb and $1.90/lb (€3.55/kg to €3.77/kg). This reflects futures markets, which were low last autumn, and many major buyers taking a chance with the spot market to fill orders and getting caught. US 85% lean trim is available at just $0.10/lb (€0.20/kg) more.

Strong

The Irish trade is also reporting strong demand for manufacturing beef and trimmings, with little product being sold as fast as it is produced and little going to cold store. Hong Kong, the Philippines as well as other Asian markets that Ireland has access to are strong as well as a strong UK and EU trade.

However, the reduced supplies from Australia are acutely felt.

In France, the trade in offals remains similar to what it was this time last year, but standing ribs are up from an average of €9.75/kg last year to 10.70/kg. Cube roll, a high-quality cut taken from the centre of the rib, has increased from an average of €9.05 this time last year to €11.70/kg at present.

The steak meat trade has also taken off in the UK as is typical this time of year and also driven by the good weather which encourages barbecue sales. With the last weekend of May a bank holiday in the UK, we can expect loins to continue in demand over the coming days. This, combined with manufacturing beef being 20c/kg to 30/c/kg ahead of a year ago and little stock in cold stores, means that the market is comfortably taking cattle supplies at present.

Can prices go higher?

After a long flat period at the start of the year, there has been a steady increase for several weeks now. With beef selling, the market looks firm for the immediate future. The IFA is of the view that the market can continue to move upwards.

IFA national livestock chair Angus Woods said: “Cattle price are increasing again this week with reports of €4.10 to as high as €4.20 base offered for steers and €4.20 to €4.30 offered for heifers.”

He was upbeat about the live trade, with a boat loading for Libya this week and another on its way to Turkey.

He said the surge in live exports, up 42% this year, reflects the IFA success with getting the export charges on calves reduced.

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