It has been a positive few weeks for beef finishers. May, June and July have traditionally been good months to finish cattle over the last few years and 2021 has been no exception.

Prices in 2021 have been steadily climbing since late April on the back of reduced supply and increased demand.

Bord Bia’s latest price comparison with both the EU and UK puts Ireland in between our two most important markets. Ireland currently sits at €4.22/kg excluding VAT. The UK is at €4.66/kg excluding VAT while the EU is currently averaging €3.86/kg excluding VAT.

The Irish-UK price gap has closed considerably in the last few weeks, with the price gap sitting at almost €1/kg back in March this year. This has closed to 44c/kg last week.

Bord Bia’s beef price tracker tool puts the Irish composite price on a par with our prime export benchmark price at an average of €3.88/kg so far in 2021.

On the ground here in Ireland, heifers started off this week very strong with a €4.40/kg base price available in a number of factories and bullocks moving to €4.30/kg base price.

With quality assurance and grading, that means this week’s beef price is at €4.66/kg including VAT for an R+3+ heifer. Throw in an Aberdeen Angus bonus of 25c/kg or a Hereford bonus of 15c/kg and you aren’t that far off €5/kg something the industry hasn’t seen in the last 10 years.

The big question is, will the positivity continue and if it does, how long will it last?

Live exports

Calves remain an area for concern. COVID-19-related closures of the food service trade because of imposed lockdowns across main European countries has meant the veal trade has taken a huge hit.

There is hope that this will recover from the third quarter of 2021. However, it means that Irish calf exports to our main export markets has been restricted for all of 2021.

The Netherlands has seen the biggest drop, with 36,542 fewer calves exported compared with the same period in 2019, the last normal year for live exports – an almost halving of calf exports.

Belgium has also seen a decline, albeit on smaller numbers. Italy has seen an improvement in exports, with numbers on a par with 2019 levels.

Issues with currency fluctuation and Government contracts mean lower numbers have been exported to Libya and Turkey compared to recent years.

The standout performer in 2021 has been Northern Ireland, up 71% on the same period in 2021.

A critical point to this figure is that a lot of these animals have been either forward stores or finished cattle moving north, taking them out of the southern supply chain. This has affected slaughter numbers and helped the positive direction that the Irish beef price has taken in the last few months.

Some farmers have asked the question in recent months as to how can this happen given the issues with the Red Tractor label and nomad cattle. A lot of these animals have been cull cows destined for the Northern Ireland food service trade so don’t need the Red Tractor label to enter the retail trade.

The combination of a strong retail trade and tight supplies in the UK has meant that supplies of suitable Northern Ireland-bred cattle have been hoovered up, leaving a hole in the NI food service trade for cattle imported from the Republic of Ireland to fill.

Table 2 outlines the type of animals exported. There has been a big drop in calves exported over the last two years, with almost 50,000 fewer calves exported in 2021 compared to the same period in 2019.

Weanlings have also seen a drop as a result of reduced Middle Eastern demand. Store cattle and finished cattle have both seen increases driven by the Northern Ireland trade. This has resulted in a 7% increase in exports on 2020 levels.

Looking at Animal Identification and Movements (AIM) data, Irish cattle availability as of 1 May 2021 shows a couple of key changes in the older age categories that are coming to slaughter age at the moment and in the next few months.

In the 24- to 30-month age group, we have 7% less cattle compared to 2020, with 13% less cattle in the 30- to 36-month category. This is causing the current tightness in supplies that factories are experiencing and offers part of the explanation for why the price has risen in recent months.

This, coupled with the fact that the Irish cattle kill will reduce by 110,000 head in 2021 to 1.69m head, means the rest of 2021 is likely to be positive for the beef trade.

The cattle kill so far this year is currently 60,000 head behind the same period in 2020.

UK-EU production

The Irish-UK price gap has closed considerably in the last few weeks with the price gap sitting at almost €1/kg back in March this year. \ Philip Doyle

At Bord Bia’s meat market update seminar last week they outlined that beef production in our two most important markets, the EU and UK, is also down. AHDB is forecasting beef production to fall by 5% in 2021.

EU-27 beef production is also forecast to fall by 2%, with France and German beef production to fall by almost 4% each.

In other years, this shortfall in supply may have been offset by imports from South American countries.

However, this year, given the uncertainty that existed in the food service trade, meat traders were slow to enter into sales agreements, which has also helped prices.

Imports of beef into the EU are down 10% for January to April 2021, with Brazilian imports back by 7% and Argentinian imports back by 20%.

Demand has been good, with retail sales volumes of beef still up 7% when compared with 2019.

The current picture of the global trade situation would be one of reduced supplies and good demand.

There is a growing confidence that both the economic recovery and food service recovery will be positive for beef sales. This, coupled with reduced import pressure, would point to a positive few months for beef finishing.

The only negative on the horizon is the transfer of our young bulls to bullocks in 2022 and the impact that reduced calf exports in 2020 could have on the 2022-23 trade.