Prices for EU beef and pork set to stay strong
According to a new report from Rabobank Food and Agribusiness Research and Advisory, the EU has seen extreme beef and pork prices throughout most of this year, with pork prices hitting “near-record highs”.
“Similar price levels have only been seen during shortages of cattle and hogs ready for slaughter in the EU following severe disease outbreaks,” said the report.
Estimations indicate that the supply of cattle and pigs will be short for the rest of this year and into 2013 and 2014. The report explained that high prices have been caused by an international shortage of beef and pork, caused by low production, which will continue to raise prices.
Margins in the EU meat industry have been pressured for several years due to the inability to pass on the full impact of “surging beef and pork prices upstream in the chain”, said the report. Feed prices, which are nearing the record levels of 2008, are also causing production and retail prices to increase, while rumours of mass herd culling in different countries around the world are leading the EU meat industry to question what the prices of beef and pork will be in 2013 and 2014.
Rabobank said that EU pig carcase weight values have reached almost €1.90/kg, bringing them close to the 2001 record high of €1.94/kg, which was caused by the outbreak of BSE and foot-and-mouth disease.
The report stated that the four factors dictating the continued rise of pig prices were the shrinking EU sow herd, high piglet prices, the EU sow stall ban and strong demand for exports.
Beef prices have also experienced a strong upswing, with steer beef carcase prices rising above €4/kg since May 2012. Rabobank said that beef carcase prices began to rise at the end of 2010 because of low global availability and the opening of the Turkish market for EU beef, which resulted in an export surge.
The report stated that EU cattle slaughter numbers were down by 5% for the first half of this year and blamed tight supplies for the strong prices. Like pork, the price of beef is predicted to remain strong into 2014.
“EU beef supply will remain very tight into at least 2014. This factor, combined with an international supply capacity that is expected to be further pressured, points to a relatively elevated price level for beef,” it said.