Beef Market Outlook Another year on the rollercoaster? Debbie Butcher, AHDB Beef & Lamb AHDB Outlook Conference 9 February 2016

Transcription

1 Beef Market Outlook Another year on the rollercoaster? Debbie Butcher, AHDB Beef & Lamb AHDB Outlook Conference 9 February 2016

2 Outline State of the UK market Forecast for supplies Wild cards Global developments

3 State of the UK market

4 Another rollercoaster year 370 p/kg yr ave Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: GB deadweight average prime cattle price Source: AHDB Market Intelligence

5 Overall prime cattle numbers back on last year Down 2% at 1.92 million head 000 head Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: UK monthly prime cattle slaughter Source: Defra

6 Adult slaughter remained high all year 000 head 80 Up 3% to 620,000 head Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: UK monthly adult cattle slaughter Source: Defra

7 Carcase weights up again Kg dw year average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: UK prime cattle carcase weights Source: Defra

8 So production just trending ahead year on year 000 tonnes Up < 1% at 883,000 tonnes Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: UK beef and veal production Source: Defra

9 As expected, imports from Ireland did slow down after the summer Tonnes 4,000 3,000 2,000 1, ,000-2,000-3,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Chart: UK beef and veal imports from Ireland, change on year, 2015/14 Source: Defra

10 But overall imports still up 6% in the year to November 000 tonnes Chart: UK beef and veal imports YTD Nov Source: GTIS Others Netherlands +22% Ireland +3%

11 Exports have proven to be a challenge Tonnes 120, ,000 Others 80,000 France 60,000 40,000 Netherlands 20,000 Ireland Chart: UK beef and veal exports YTD Nov Source: GTIS

12 But still some positive developments Fresh chilled bone in cuts 12% 12% 46% Fresh chilled carcase 18% 42% Fresh chilled boneless cuts 70% Chart: UK beef and veal exports YTD Nov Source: GTIS

13 That are adding value Frozen bone in cuts Fresh chilled carcase Frozen boneless cuts Frozen carcase Fresh chilled bone in cuts Fresh chilled boneless cuts ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Chart: UK beef and veal exports unit value per tonne YTD Nov Source: GTIS

14 Hong Kong Ireland Netherlands France South Africa Belgium Ghana Germany Poland Cote d Ivoire Others And 5Q also doing well in volume and value terms. Delivering added value. 000 tonnes Value up 2% to 57 million Chart: UK 5Q exports YTD November Source: GTIS

15 04-Jan Feb Mar Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Yr on Yr % Change Fresh beef volume and penetration lower 3 2 Penetration % Volume (000 kg) Chart: 12-week fresh beef volume performance 03 Jan 2016, % YOY change Source: Kantar Worldpanel

16 So supplies on the market increased last year 30,000 25,000 20,000 15,000 10,000 5, , tonnes change y-o-y -10,000 Production Imports Exports Supplies for consumption Chart: Estimated year-on-year change in UK beef and veal supplies, 2015 Source: AHDB forecasts based on data from Defra, HMRC

17 What about this year? Forecast for supplies

18 Dairy breeding herd continued to grow despite the challenges of last year 000 head Chart: English breeding herd, June Source: Defra

19 And the suckler herd was reported to have ended its contraction 000 head Chart: English breeding herd, June Source: Defra

20 Jan-14 Mar May Jul Sep Nov Jan-15 Mar May Jul Sep Nov Calf registrations trending up beef breeds head 12,000 10,000 8,000 6,000 4,000 2, ,000-4,000-6,000 Beef Females Beef Males Chart: Monthly beef breed calf registrations, change on year Source: BCMS

21 Jan-14 Mar May Chart: Monthly dairy breed calf registrations, change on year Source: BCMS Jul Sep Nov Jan-15 Mar May Jul Sep Nov And dairy on the back of the bigger herd 8,000 6,000 head Dairy Females Dairy Males 4,000 2, ,000-4,000

22 So we have more younger cattle on the ground 35,000 30,000 25,000 head Dairy female Beef female Dairy male Beef male 20,000 15,000 10,000 5, ,000-10,000-15,000 Under Chart: October 2015, GB cattle population under 18 months Source: BCMS

23 Chart: Forecast year-on-year change in UK prime cattle supplies Source: HMRC, AHDB MI (actual), AHDB MI (forecasts) Impact on prime cattle supplies to be felt later this year % change y-o-y Forecast up 2% to 1.96 million head Q1 Q2 Q3 Q4 2016

24 Cow numbers to be high for another year % change y-o-y Forecast up 3% to 635,000 head Q1 Q2 Q3 Q Chart: Forecast year-on-year change in UK adult cattle supplies Source: AHDB MI (forecasts)

25 Chart: UK beef and veal production forecasts change on year Source: AHDB Market intelligence forecasts For the UK this means that production will be up % change Q Q Q Q4 2016

26 Chart: Irish forecasts, cattle at export plants Source: Bord Bia In Ireland production also up this year % change 2016/15 20 Jan - Jun Low High Jul - Dec Steers YB Heifers Cows Steers YB Heifers Cows

27 Chart: Forecast year-on-year change in UK beef and veal trade Source: AHDB MI (forecasts) UK exports could do better but imports still likely to be robust 2.5 % change y-o-y Exports Imports

28 Supplies on the UK market will increase again this year 000 tonnes change y-o-y ,000 25,000 20,000 15,000 10,000 5, ,000-10,000 Production Imports Exports Supplies for consumption Chart: Estimated year-on-year change in UK beef and veal supplies, 2015 and 2016 Source: AHDB forecasts based on data from Defra, HMRC

29 Wild cards

30 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 How competitive will Irish product be? 420 p/kg Ireland UK Chart: Irish and GB steer price, Source: Eurostat

31 In part, the answer to that will lie with exchange rates 1.45 : Jan 09-Feb 09-Mar 09-Apr 09-May 09-Jun 09-Jul 09-Aug 09-Sep 09-Oct 09-Nov 09-Dec Chart: Euro:sterling exchange rate Source: Pacific exchange rate service

32 How will beef perform with the consumer? minutes minutes minutes Source: Kantar Worldpanel usage

33 Given that price is the main driver of product choice 1 Price 2 Special offers 3 Quality or performance 4 Taste or smell 5 Use by or sell by date 6 Familiar 7 Healthy option 8 Brand 9 Ease of using 10 Ethical or eco-friendly Source: IGD ShopperVista

34 Italy Germany Neth Spain France UK Bos&Hert Others Poland - continued competition Tonnes 100, ,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Chart: Polish exports YTD Oct Source: GTIS

35 Global trends

36 Chart: Brent spot prices Source: EIA Impact of the oil crisis in some parts of the world $ per barrel

37 Chart: Chinese beef imports Source: GTIS China s momentum has picked up, will it continue? Tonnes 160, , , ,000 80,000 60,000 40,000 20, Australia Uruguay New Zealand Brazil Argentina Canada

38 Some global trends (not so wild for the UK beef sector) 000 Tonnes 1,300 1,250 1,200 1,150 1,100 1,050 1, Chart: Australian beef and veal production Source: MLA Australia production down 13% in Exports back Cattle herd is forecast to decline to 26.2million head by 30 June 2016, making the unusual sequence of two consecutive years with 5% year-on year declines. Extreme forces throughout the year. US prices corrected could limit price movements but weak A$ will benefit as will supply situation.

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40 The US cow herd up 3%. Impetus for herd rebuilding strong. Most significant upturn in the US cattle cycle in 20 years. Potential for exports from South America to increase this year. Brazil dependent/us access? Elimination of curbs on exports from Argentina, and the liberation of the currency could provide a boost. The rise of the Paraguayan beef industry has been helped by investment and expertise flowing in from Brazil. Small quota to the EU Uruguay exports up last year, increase in trade with the US and China. Lower reliance on the Russian market and access to the US market gave Uruguay the upper hand over Brazil.

41 Conclusion Increased production Increased Imports PRICE? Meeting market requirements More positive exports

42 Thank you