Beef market outlook. Debbie Butcher, Senior Analyst - Beef & Sheep. Agriculture and Horticulture Development Board 2016 All rights reserved

Beef market outlook Debbie Butcher, Senior Analyst - Beef & Sheep Agriculture and Horticulture Development Board 2016 All rights reserved

Change 000 tonnes Last year in a nutshell 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0-5,000-10,000 Ireland -2% -4% Value up 5% at 328 million 10% Production Imports - est Exports - est Supplies for consumption - est Chart: Estimated/actual UK beef and veal supplies Source: AHDB forecasts based on information from HMRC and Defra

Jan-15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-16 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-17 Euro/sterling currency swings / 1.45 1.40 1.35 1.30 1.25 1.20 BREXIT 1.15 1.10 Pacific exchange rate, euro/sterling exchange rate

An immediate impact on imports from Ireland following Brexit tonnes, change on year 2,000 1,500 1,000 500 0-500 -1,000-1,500-2,000-2,500-3,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Chart: UK beef and veal imports from Ireland, change on year Source: HMRC/GTIS

Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Effect on gap between UK & IE p/kg 380 IE UK 360 340 320 300 280 260 Chart: Irish and UK steer price, 2015 2017 Source: Eurostat

Robust prices over the summer then stability p/kg 360 2016 2017 5 yr ave 2012-16 350 340 330 320 310 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: GB deadweight average prime cattle price Source: AHDB Market Intelligence

What s ahead for 2017

Smaller dairy breeding herd Levelled in June last year after growing in Dec 2015 000 head 2,000 1,950 1,900 1,850 1,800 1,750 1,700 1,650 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (f) Suckler herd stability In June 16 it maintained its December 15 growth 000 head 1,800 1,750 1,700 1,650 1,600 1,550 1,500 1,450 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (f) Chart: UK breeding herd, June Source: Defra

Dairy has led cow slaughter heads 30 to 36 36 to 42 42 to 48 48 to 72 72+ 4,000 3,000 2,000 1,000 0-1,000-2,000 Jan Dairy Feb Mar Apr May Jun Jul Aug Sep Oct Nov Jan Beef Feb Mar Apr May Jun Jul Aug Sep Oct Nov Chart: GB change on year female deaths >30 months of age Source: BCMS

Jan-14 Mar May Jul Chart: Monthly dairy breed calf registrations, change on year Source: BCMS Sep Nov Jan-15 Mar May Jul Sep Nov Jan-16 Mar May Jul Sep Nov Dairy bred registrations trending up Until this year sign of the times head 8,000 6,000 Dairy Females - 25,000 Dairy Males -31,000 4,000 2,000 0-2,000-4,000

Jan-14 Mar May Jul Chart: Monthly beef breed calf registrations, change on year Source: BCMS Sep Nov Jan-15 Mar May Jul Sep Nov Jan-16 Mar May Jul Sep Nov Continue to be higher for beef bred calves head 12,000 Beef Females +33,000 Beef Males +34,000 10,000 8,000 6,000 4,000 2,000 0-2,000-4,000-6,000

Chart: Jan 2017, GB cattle population under 30 months Source: BCMS For production this year. head 13,000 11,000 9,000 Dairy female Dairy male Beef female Beef male 7,000 5,000 3,000 5,461 4,764 10,666 7,547 11,782 5,798 6,791 9,020 4,830 1,000-1,000-1,964-2,181-3,000-4,714-5,000 12-18 18-24 24-30

Chart: Jan 2017, GB cattle population under 12 months Source: BCMS More younger beef cattle on the ground. head 20,000 15,000 10,000 5,000 0 12,531 15,724 13,578 14,320-5,000-10,000-17,521-11,054-15,495-15,000-27,873-20,000-25,000 Dairy female Dairy male Beef female Beef male -30,000 Under 6 6-12

Chart: Forecast UK prime cattle supplies Source: HMRC, AHDB MI (actual), AHDB MI (forecasts and estimates) Impact on prime cattle supplies head Forecast up 1% in 2017 to 1.990 million head 510 505 500 495 490 485 480 475 470 465 460 +0.6% +1.2% +0.4% +0.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017

Chart: Forecast UK cow supplies Source: HMRC, AHDB MI (actual), AHDB MI (forecasts and estimates) Cow numbers to slow down from very high position in 2016 head 200 180 160 140 120 100 80 60 40 20 0 Forecast back 8% in 2017 to 615,000 head -5% -5% -8% -14% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017

Steer weights trending lower Will limit production growth to some extent same for Hei and YB Kg dw 380 2015 2016 5 year average 375 370 365 360 355 350 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: UK prime cattle steer carcase weights Source: Defra

Same for cows Lowest Sept weight since cows came back into the food chain Kg dw 315 2015 2016 5 year average 310 305 300 295 290 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chart: UK prime cattle cow carcase weights Source: Defra

Overall production easing back Cows and weights! tonnes Forecast 2017 back 2% at 890,000 tonnes 250 240 230 220 210 200-1.9% -1.1% -3.4% -3.7% 190 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 ) Chart: Actual and forecast UK beef and veal production Source: HMRC, AHDB MI (actual), AHDB MI (forecasts and estimates)

Exports positive outlook helped by Irish/UK price relationship and value of sterling this year. 2016 to Nov 42% 12% 2010 46% Carcase 17% Bone-in 12% Boneless 71% Chart: UK beef and veal exports Fresh/chilled Source: GTIS

But..imports will be up Irish output could increase by 100,000 head on 2016, to top over 1.7 million head, a number last seen almost 10 years ago. Irish cattle numbers, June 2016 % change 000 head 2016/15 Dairy Cows 1,397.9 7.9 Other cows 1,103.7 2.6 Male > 2 years 391.1-7.7 Female > 2 years 324.4-15.6 Male 1-2 yrs 83.2 10.5 Female 1-2 yrs 65.0 7.1 Male <1 1,045.6 5.1 Female <1 1,080.3 3.1 TOTAL 7,221.2 3.7 Source: CSO Ireland

Change 000 tonnes Overall supplies to be tighter More optimistic for price outlook than at this time last year 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0-5,000-10,000-15,000-20,000-25,000-30,000 2016/15 2017/16 Production Imports Exports Supplies for consumption Chart: Estimated UK beef and veal supplies Source: AHDB forecasts based on information from HMRC and Defra

Year on Year % change Deflationary pressure has had an impact on value growth. Inflationary pressure this year could well impact on volumes. 15.0 10.0 Value Change Volume Change Price Change 12.6 9.6 8.2 8.2 8.1 5.0 3.1 5.9 2.2 0.0-5.0-10.0-1.3-2.6-3.3-3.6-3.9-5.5-6.8 Total Fresh Beef Roasting Stewing Frying/Grilling Mince Source: Kantar Worldpanel Fresh Beef 12 w/e YOY % change 01-Jan- 2016

Chart: Oct 2016, Native cattle numbers, change on year 2016/15 Source: BCMS Native cattle numbers higher What does this mean for the price premium? head 12,000 AA (12-24 + 7,980) Hereford (12-24 + 12,400) 10,000 8,000 6,000 4,000 2,000 0-2,000 0-6 6-12 12-18 18-24

Debbie.Butcher@ahdb.org.uk 024 7647 8851