Analysis Cattle & Beef
Beef price stabilizes after downward correction
The cattle price is stable again after a three-week decline. In practice, the decline was mainly a correction of the previous increase. The start of the school holidays allowed slaughterhouses to push the price back down.
In week 27, prices of both U and P quality cattle dropped by 5 cents. The U quality was priced at €4.97 after the reduction, while the P quality was paid €3.18.
The decline three weeks ago gives a distorted picture of the market, as the beef market has been relatively stable since mid-spring. Sales have been sluggish for months. Market insiders have been indicating for over two months that sales of almost all carcass parts are weak. During most of the spring, trimmings were selling well, but since summer, even the sale of this less common meat has been difficult.
The market prepared for the barbecue season, but due to bad weather, the season was off to a slow start. Supermarkets sometimes end up with large quantities of meat as a result. Consequently, little meat has been ordered recently, and barbecue parts have been sold in bulk and consumed in daily meals. This has led to a decrease in demand for beef and pork across the board.
Decline turns out to be a correction
The reduction in week 27 should be seen mainly as a correction to the increase that occurred three weeks earlier. Around week 24, market insiders reported a decrease in the number of slaughter cattle. Until that point, significantly more cattle were being slaughtered than would be expected based on the five-year average. This meant that, despite weak meat demand, there was little reason to lower prices.
The risk of empty slaughter lines was too high, according to individual slaughterhouses. This created the risk of spreading fixed costs over too few carcasses. Moreover, when the supply dried up, slaughterhouses raised prices to avoid missing out. However, the potential for price increases remained limited due to weak meat demand. With the start of the school holidays three weeks ago, there was finally room for a reduction. During this period, meat demand is lower. At the same time, much slaughter staff is on vacation, reducing slaughter capacity. This allows slaughterhouses to purchase fewer cattle.
Slaughter figure normalizes
The lower number of slaughters is gradually becoming apparent in the statistics. Until recently, the slaughter figure remained significantly higher than normal due to a higher number of calf slaughters. Compared to the rest of the year, the slaughter figure has normalized. Until week 25, the number of slaughters was consistently above the five-year average. Sometimes the slaughter figure was nearly 25% higher than usual. According to the latest RVO measurements, the slaughter figure in week 28 was still slightly higher than the five-year average.
However, there is clearly a normalization. In total, only about 250 extra cattle and calves are slaughtered. This represents a difference of 2.5%, a small difference compared to previous slaughter data. Throughout the year, the slaughter figure was 9.4% above the five-year average.
