The price of beef cattle has risen sharply. The supply of cattle is exceptionally scarce worldwide, which is why cattle prices have far exceeded the previous record level in recent weeks. In the Netherlands, the carcass price is now almost 9% above the previous record. The expectation is that prices will continue to rise. Meanwhile, dairy cattle are also becoming increasingly expensive.
The listing on the Livestock & Logistics of beef cattle has far exceeded the record level of shortly after the invasion of Ukraine. Since the previous record was equaled four weeks ago, the price of cattle of the highest quality in the Netherlands has increased by 8,9% to €6,40 per kilo. It is remarkable that prices have sometimes increased by 25 cents in recent weeks, while increases of more than 5 cents are already quite unusual.
Global shortages
The high prices are the result of global shortages. The number of cattle is exceptionally low worldwide. In the United States, drought has led to the smallest cattle population since 1952. In neighboring countries Canada and Mexico, supply is also scarce. Meanwhile, Europe is struggling with a sharp decline in the number of beef cattle, especially from France.
During the Christmas period, an exceptionally large number of cattle were slaughtered to meet the high demand. This has put further pressure on the tight market. In countries such as Brazil and Australia, where sufficient cattle are still available, meat exports are now running at full speed to compensate for the shortages elsewhere to some extent. However, this cannot curb the sharp price increase.
Troublesome supply
The price increase started in the most luxurious segment. Due to these shortages, consumers increasingly switched to cheaper alternatives. This has led to an explosive increase in all beef prices, including in the lower segment. There is no end in sight for this trend for the time being. Prices have risen alarmingly quickly, but the market is convinced that this increase is only the beginning. The supply is increasingly faltering. The main cause is that cattle are being slaughtered at an increasingly younger age, which creates a vicious circle. Because cattle are being slaughtered at a younger age, the slaughter weight decreases, which results in lower meat production per animal.
There is no end in sight to the increase, although this trend cannot continue indefinitely. There is always a limit to what consumers are prepared to pay, especially now that purchasing power is already under pressure. Eventually, the tide will turn. However, it remains a matter of guesswork when that point will be reached.
Dairy cattle are also increasing
Meanwhile, the prices of dairy cows are considerably more expensive. Especially if the cattle are still suitable for the production of meat parts. The P-quality is now also at a record level. The prices are now 3,3% higher than just after the start of the war in Ukraine.
The prices of sausage cows are still below that level, but the quality classes are starting to diverge. The difference between the prices of first and second quality sausage cows has clearly increased in recent weeks. In week 1 of 2024, first quality sausage cows were 12,5%, or 35 cents more expensive than second quality sausage cows. In week 11, the difference had increased to 14,7%, or 50 cents.
Due to the high milk prices, dairy cattle are slaughtered at a higher age, which means that most cattle fall into the second quality category. In addition, the incentive to fatten cattle a little longer to get the cow to a P-class is less attractive, now that prices are so high across the board.