Meat commodities

Pork

The last two years have been very challenging for UK pig farmers which has led to a contraction in production, with the UK herd size declining by 15% as farmers scale back or leave the industry. This has been caused by a combination of limited abattoir processing capacity and the highest feed prices on record which now account for 70% of total pig production costs.

As a result, market prices have also reached record highs, and September 2022 saw the first time that farmgate prices broke the £2 kg threshold. Deadweight pig prices are still high reaching £2.13 kg in April.

With self-sufficiency rates at 62.5%, the UK market is reliant upon imports from Europe to fulfil demand. But the European market is also experiencing similar challenges, and prices have been on an upward trajectory for the past year, linked to the sudden rise in feed prices following Russia’s invasion of Ukraine.

We expect prices to remain firm for the foreseeable future, with cheaper meats or cuts in high demand due to the cost-ofliving crisis.

Beef

Record UK farmgate beef prices could exceed the £5 kg threshold for the first time in history. Historically high prices have been fuelled by tight supplies, high production costs and strong domestic demand. Looking forward at 2023 supply, prime cattle slaughter is forecast to pick up by 1.2%.

The continued strain on household budgets is expected to have the biggest impact on shoppers’ behaviour with forecasts that shoppers will choose to opt for cheaper proteins and cuts. The out-of-home market, while suffering, may also exacerbate a potential carcase imbalance with value-led quick service retail gaining market share through dine-out and delivered takeaways. Expect cheaper beef products such as mince and diced beef being impacted the most by rising demand driven cost pressure.

Lamb

Following two years of unprecedented high prices, lamb markets are returning to their five year average. Domestic supply is currently six percent higher than a year ago and expected to rise to almost 16% higher by July.

Unlike beef and pork markets, domestic retail demand remains sluggish, with the latest AHDB report indicating a 9.2% decrease in retail volumes this year. This is unsurprising as lamb is one of the most expensive proteins. During the religious festivals, Ramadan and Easter, short term demand normally acts as upward pressure on pricing however, the longer-term trajectory is lower domestic demand leading to a weakening in prices.

Chicken

Global Poultry Markets continue to be influenced by avian influenza and high input prices.

With UK poultry self-sufficiency at 65% there is a continued reliance upon EU imports to meet domestic demand. European supply remains constricted, with the latest reports forecasting an annual production downturn in 2023 by up to 3%, or 420,000 tonnes on the 5-year average. Avian influenza and high feed prices are impacting poultry production but the effects of avian flu should ease as we transition to spring.

Unlike the EU, domestic production has steadily increased over the past 6 years and whilst there was a reduction in production towards the end of 2022, attributed to the higher energy and feed costs, early indications show an increase in expected volume in 2023.

Following the trend with other cheaper protein products, poultry prices are 30% higher than the five-year average, resulting from higher input costs and consumer demand for value. Yet, there are no signs of poultry prices falling in the near-term.