beef prices forecast to keep rising

Beef prices forecast to keep rising, says NFU
01/02/2008 15:00:00
FWi
Finished beef prices are on the up, but they've not peaked yet, says the NFU.

The recent rise in domestic beef prices is cause for optimism, but prices are still well below the world market levels, says NFU livestock board chairman Thomas Binns.

Over the past eight to 12 weeks world beef prices have risen from about $5000/t to over $8000/t, while the domestic price has hovered around $2500/t. Mr Binns concedes that much of the recent price rise is the result of fluctuations in the currency market caused by a weakening dollar, but feels other factors are at play.

"Prices are rising, but they're not finished yet. Beef supply around the world is tightening and this is before we see the impact of the EU ban on Brazilian beef that comes in at the end of the month," he told NFU Council on Tuesday (29 January).

While the big retailers were permitted to honour all contracts agreed before the end of January, they were prevented from signing new ones under the terms of the EU ban, he said.

Although the UK was a relatively small importer of Brazilian beef compared with other EU member states, Mr Binns was confident its gradual exclusion from the market would stimulate the domestic export market, helping to raise prices.

"There are reasons to be optimistic, but input prices are keeping pace with rises in market prices," he added.

This impact of tightening supply was already being witnessed in the rising cost of some cuts being sold to the catering trade, he said, with the average basket of cuts increasing about 25% above the current market value.

"There are now higher prices for some South American product than for the domestic equivalent. It's been steadily strengthening over a period of time. My question is: Why haven't those in the supply chain been bold enough to come forward with minimum price contracts?"

Although the reasons were not fully apparent, Mr Binns accepted that there may be some reluctance on the part of processors and retailers not to over stimulate the market.

"A sceptic might think that there is willingness on the part of some to pay more for some product in the short term if it keeps a lid on domestic prices in the long term, but I think the real reason is that buyers are locked in to contracts."

As the market developed Mr Binns was confident that domestic prices would continue to rise. "My contacts in the trade are forecasting prices of 240-245p/kg by the end of March," he said.

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