Beef prices have been on a downward trend since September 2018. Is this a long-term trend? Are we reaping the gains from burger eaters converting to vegans? Well, probably neither.
The past year has seen significantly higher average carcase weights giving increased production, the Irish cattle kill has risen considerably (leading to much higher EU export volumes from EI), and stocks have also risen in EU cold stores. There have also been some serious market distortions from the freezing down of product (and stockpiling) throughout both UK and EU as a result of the 31st March Brexit deadline, which of course may well reoccur later this year.
What is perhaps of more relevance is the likely mid-term impacts of African Swine Fever in China (millions of pigs having been destroyed) upon all protein markets in the latter part of 2019 and into 2020.
Pork consumption in China is falling dramatically, through both unfounded health fears, and higher cost, and this is being replaced by beef, lamb and chicken. Imports of these from global markets have been steadily rising (Q1 beef imports were up 47% for example), but we expect a much larger surge in demand for these later this year as China’s frozen stocks of pork being to run out.
What is of most concern is that there is currently not enough protein produced within global markets to fill the gap in the Chinese market when it fully materialises. The UK has recently been granted access to China for beef imports,and it seems highly likely that UK beef will see large increases from China as a result.
Operators with a large reliance on protein should watch developments carefully.