IFA National Livestock Committee Chairman Michael Doran said the prospects for the EU beef market are very positive, with prices forecast to stay rising in 2012.
Speaking following an EU Beef Advisory meeting in Brussels, Michael Doran said the EU Commission is forecasting beef prices to continue rising in 2012, driven by lower production and tighter supplies, increasing exports and lower imports. “The Commission is forecasting beef production for the EU to decline by 2.8% to 7,122m tonnes in 2012 and prices to increase by a further 1.7%, on top of a 9.5% price increase in 2011.”
The EU Commission pointed out that the very positive change in beef prices has come about because of the dramatic increase in EU beef exports, up 230,000t so far in 2011 compared with 2009 levels and the fall off in beef imports, down 189,000t to date in 2011 compared to 2009.
This dramatic swing in the European beef market, going from a net importer of 308,000t in 2007 to a net exporter of 237,000t this year, has been driven by a dramatic surge in world beef prices and a fall-off in beef production.
Michael Doran pointed out that the EU Commission statistics show that cattle prices on the world market, as measured by Brazil, Argentina and Uruguay, were ranging from €1.50 to €2.00/kg for the years 2007, 2008 and 2009. Since early 2010, the world beef price has jumped dramatically and continues to rise. For 2010 and 2011 prices in the key South American exporting counties have ranged from €2.50/kg to €3.00/kg. In reality he said prices on the world market have closed a large proportion of the major gap with EU prices.
Cattle stocks in the USA are at record low levels and cattle prices have hit the highest rates ever recorded. The drought and destocking in the major beef production states of Texas and New Mexico are very dramatic and will have a long term impact.
Michael Doran pointed out that the increase in world beef prices has opened up many new opportunities for European beef exports, with a massive increase in exports to Turkey at 131,562t to date this year. He pointed out that total EU beef exports to the end of September this year have reached 478,793t, compared to exports of 249,165t for all of 2009.
On the domestic market, Michael Doran said Bord Bia are forecasting cattle supplies at the factories to be even tighter in 2012 with slaughterings back by up to 90,000 head. Steer supplies are projected to fall by 50,000-70,000 head and heifer supplies are forecast to be back by 27,000-37,000 head. He said this would leave prime cattle supplies extremely tight for 2012.
Michael Doran also pointed out that the Department of Agriculture AIMS data show male animals in the 12 to 30 month age category down by 168,000 head in July 2011.
In the UK, EBLEX are forecasting cattle supplies to fall by 6% in 2012, pointing to a very strong market demand for beef imports.
On consumption, Michael Doran said the 52 week figures to October 2<sup>nd</sup> 2011 show a 2.3% increase in retail prices and a 2.4% volume reduction in Ireland on beef. In the UK, the same figures show a 1.2% price increase and a 0.2% volume increase.