Tighter cattle supplies and strong retail demand has seen beef prices soar to ’exceptional levels’ in recent weeks.
The latest data from AHDB revealed the GB all prime average hit 391.9p/kg for the week ending March 27, 56p/kg higher than the same week last year and 53p/kg above the five-year average.
Cull cow prices also trended well above last year, with prices 37p/kg up on the same week in 2020 and 40p/kg higher than the five-year average.
Stuart Ashworth, director of economic services at Quality Meat Scotland, said he had never seen such ’exceptionally high prices’ for this time of year, in living memory.
“Census data shows there is a shortage of cattle in the system short-term, both in the UK and Ireland,” Mr Ashworth said.
“Cattle supplies will likely remain tight then start to ease through the summer, so there is an inevitability that as this supply builds, prices will adjust.
“The current situation is interesting with limited out of home consumption, demand in supermarkets and high street butchers is very strong and competition between supermarkets is intense, leading to challenges for processors to meet contracted supply volumes without margins coming under pressure.”
Hexham and Northern Marts auctioneer Chris Armstrong added all buyers were reporting a shortage in cattle numbers and increasing prices to compete.
“The live ring is leading that charge and prime cattle sales have been reporting a buoyant trade, with increasingly dearer prices week on week against the backdrop of decreasing numbers,” Mr Armstrong said.
“We have sold a good entry of cattle throughout March and people have been astounded by the levels attainable week on week through the ring at Hexham, up £120/head to £150/head on the year for steers and heifers.”
Duncan Wyatt, AHDB analyst, said the higher prices should last a while until at least the foodservice market opens again and demand starts to move out of retail.
“It will depend on the speed and confidence with which people start to eat out,” Mr Wyatt said.
Mr Ashworth highlighted a nervousness among wholesalers about potential cash challenges which could change the supply and demand balance, impacting beef prices.
“We need to recognise as out of home catering starts up again, that part of the supply chain has to bring itself back into life, which comes with a degree of risk when considering extra demand for working capital and provision of credit to customers,” Mr Ashworth said.
“Those putting meals on plates out of home may be severely cash challenged which could impact how much they are willing or able to pay for their raw materials.
“At the same time supermarkets may find demand easing back and abattoirs are likely to find the balance of cuts demanded changes as the retail market moves out of lockdown which will affect the value of that carcase.”