It is not just prime beef in Scotland that has been enjoying a price surge this year, the cull cow trade has also excelled.

Cows in Scotland are different from the rest of the UK because of the dominance of suckler-bred cows compared with the rest of the UK. In Scotland, two thirds of cows are recognised beef breeds, while it is a case of more than half of cows being dairy-bred in the other UK regions.

There are two key elements that set the market value, both of which are in farmers’ favour at present.

Market demand

The first is market demand for cow beef.

Most of the cow carcase is dedicated to grinding for burgers or as an ingredient in beef-based dishes, such as lasagne or pies.

There has been a prolonged period of several months of increased demand for manufacturing beef that has used up all the frozen stocks that were carried in cold stores in recent years.

We are now in a situation where manufacturing beef is being produced to order, with little or nothing being carried.

This level of demand for manufacturing beef was last experienced in the UK in the aftermath of the horsemeat scandal in 2013.

Sterling weakness

Having market demand is one thing, but what is ultimately shaping the value of UK beef at present is the relative weakness of sterling against the euro, the currency in which the vast majority of Scottish exports are sold.

Hindquarter cow cuts are primarily sold in France, with some sales to Spain. With €1 being worth 88p today compared with 70p 18 months ago in November, this makes Scotland’s beef extremely competitive in continental markets.

What is driving demand?

The simple answer is the most basic principle of economics: supply and demand.

The world’s biggest exporters of manufacturing beef for grinding is Australia which is experiencing a 25-year low in cattle numbers for slaughter.

There, sales of manufacturing beef –which exceeded 400,000t in 2015 – are projected to be half that figure this year.

In Europe, a recovery of dairy prices has reduced the urgency in cow culling, with the exception of the Netherlands which has been reducing its cow population because of environmental constraints.

Alongside this reduced availability, is a continued growth in global demand. This is driven very much by China, which is expected to import 1m tonnes of beef tonnes of beef this year: more than double their 2013 level.

A further feature that is driving beef price at present is the high levels of global pigmeat prices.

This is an alternative protein and traded at a low value from the introduction of the Russian ban in August 2014 through to March 2016.

At that point pigmeat was the value protein, but subsequent recovery to current record prices has made pigmeat a relatively expensive protein with beef again looking a relative value-for-money alternative.