Cattle prices continue to slide and have dropped £60/head on the year. Margins are tightening on beef farms as increased straw and fodder prices cause concern.

However, there are signs that the beef price could improve later in the year.

This week’s reported beef price is similar to last week’s at £3.65/kg for an R4L steer, which is 2p below the price in northern England.

“The low beef price is presenting a substantial challenge to farm and croft cashflow in Scotland,” said NFU Scotland livestock policy manager John Armour.

“Given the ongoing uncertainty over future trading arrangements because of Brexit and the high cost of farm inputs, we need to see the market performing better to ensure that beef producers can invest and plan for the future.

The global situation shows some second quality hides being hit hard

“Industry market experts say that there are a number of factors influencing the beef price but ultimately we need to see improved demand and greater support from retailers and others.”

The situation is little better across the UK, with AHDB reporting the GB deadweight all-prime price average slipped by 2.5p, to stand at 349.9p/kg for the week ending 18 January.

The measure stands almost 11p below year earlier levels and nearly 7p behind the five-year average.

Stuart Ashworth, director of economic series at Quality Meat Scotland (QMS), also points towards a falling hide value affecting beef prices.

“In the last 12 months, the value of hides has dropped by 50%” said Stuart.

There has also been a decline in demand from the luxury car sector

“The global situation shows some second quality hides being hit hard. The cost of processing and pressure on the leather footwear and fashion market are depressing prices.

“There has also been a decline in demand from the luxury car sector.”

The value of a hide is equal to around 3p/kg for deadweight cattle.

Despite poor beef prices, there is hope the price will rise rapidly when it does turn.

Tight supply forecast throughout 2019 indicates that prices may react positively as abattoirs chase cattle. Calf registrations have dipped in recent years, eroding Scotland’s production base.

This contributed to QMS reporting a fall in levy income by 4% to the organisation.

Heifer kill up

While the steer and young bull kills were down in 2018, the heifer kill was up by 2.3%, with nearly 3,500 more killed in Scotland.

This indicates a poor confidence in the beef sector, with many pointing towards Brexit as the source of uncertainty along with increased wintering costs.

Kepak, new owners of the McIntosh Donald abattoir near Aberdeen, have indicated they want to increase their kill to 1,600 head of cattle, putting extra pressure on demand for Scotch beef. Further demand could come from Scotbeef’s new slaughterhouse at Inverurie.

Demand is also hoped to rise off the back of a scheduled spring QMS beef promotion campaign, with a TV advert being filmed next month.