According to the EU Commission‘s latest Short Term Outlook report, net beef production this year is now forecast to increase almost three per cent on last year, driven by higher slaughterings, of mostly dairy cows, as the dairy sector continues to face market difficulties, and good export demand. Production in the first half of the year is already up by over three per cent, driven by a surge in volumes coming from Poland and an acceleration of female slaughterings in EU-15 countries during the April to June period. With the exception of Italy and Sweden, all EU counties have reported higher cow and heifer throughputs over this time period, compared to last year. Restructuring of milk production systems and the culling of surplus female cattle seem to have started in all member states, not just those that had been expanding their dairy herds over the past few years. This is expected to continue as the year progresses. In addition, production will be given a boost from the culling of suckler cows in France. The consequences of the increase in the suckler cow herd are not expected to lead to significantly higher slaughterings before the end of this year. Net beef production is forecast to be little changed in 2017.
Exports of live cattle from the EU have increased significantly this year because of sustained demand in the Mediterranean region. Key destinations are Turkey, Israel and Lebanon. However, despite the trade to Turkey facing increased competition from Uruguay and Brazil, they are still expected to remain strong into 2017. Beef and veal exports are also doing well. Tight supplies on the world market and firm demand at relatively high prices have opened opportunities to the EU. A large portfolio of destinations is showing marked increases in the year to July, and for the year as a whole exports are forecast to be up 10 per cent on last year. Imports in the year so far are up, with shipments from Brazil up the greatest degree, a confirmation of their improved competitiveness and subdued domestic demand.
Net production of sheep and goat meat in the EU is anticipated to increase just one per cent in 2016. Rising live exports, which are up over 40 per cent in the first half of the year, are limiting production growth and, consequently, domestic slaughter is forecast to be up just one per cent. For the UK, official figures show sheep meat production was down five per cent during the first half of this year, which was somewhat unexpected due to an increase in the sheep flock reported in the 2015 December livestock survey. Therefore, it is anticipated that slaughtering rates will increase in the latter half of the year to bring overall UK production figures for 2016 up one per cent on last year. Note that AHDB will be releasing its own updated production forecast later this month.
Imports are reported to be up eight per cent during the first half of this year, largely due to increased shipments from New Zealand. However, the New Zealand lamb crop was lower than expected and, thus, it is anticipated that imports will slow down in the latter half of the year. Overall, volumes are expected to be up two per cent for the year as a whole. Meanwhile, the small export trade is forecast to be broadly level year on year. In the year so far, lower shipments to Hong Kong have been offset by positive developments in Switzerland. In contrast, the live trade, mainly to the Mediterranean region including Libya, Jordan and Israel is expected to remain very strong, increasing by over a third this year to a record high level.
Prices in both sectors have been subdued this year so far. For the cattle sector, dairy restructuring has had an impact on prices of all categories of cattle. In particular, no summer peak in cow prices has been evident this year. However, male prices have been on a slight upwards trend since mid-summer. This has been supported by strong global demand amid the context of supply shortages in Australia and is regardless of China’s economic slowdown. In the sheep sector, heavy lamb carcases fell below their five-year average price in the April-June period but have since returned to average levels. Meanwhile, light lamb prices which fell during March have been recovering since May, however they remain below the five-year average price range.