Beef market outlook

January 2021

  • 5% fall in beef and veal production expected in 2021, due to tighter cattle availability
  • Domestic consumption expected to fall 3% overall in 2021, due to easing retail sales
  • Imports expected to grow by 4% in 2021, due to lower production and growth in foodservice demand
  • Exports expected to fall by 3% in 2021, largely due to lower production

Overview

UK beef production is expected to contract in 2021, largely driven by tighter cattle supplies. Domestic consumption is forecast to fall 3% from 2020, as retail demand eases and foodservice shows some recovery. This is expected to raise demand for imported beef, however shipments could be limited by tighter Irish supplies. Exports are expected to contract slightly as domestic production tightens. Volumes are also expected to be hampered early on by UK/EU trade friction and slow recovery of European foodservice.

UK production

Both the dairy and suckler breeding herds are expected to continue tightening in 2021, in line with long-term trends. Heifer slaughter was elevated in 2020, which is expected to have reduced the number of replacements available going into 2021. Overall, prime cattle slaughter was 2% higher year-on-year in 2020.

For 2021, prime cattle slaughter is forecast to fall by 5% year-on-year, due to tighter cattle availability. This is expected to contribute to a year-on-year reduction in beef production of 5%.

UK beef trade

UK beef imports are forecast to show some recovery in 2021, by 4% compared to 2020. While domestic beef consumption is forecast to fall overall, the anticipated rise in foodservice activity, coupled with lower domestic production, is expected to increase the use of imported beef. However, imports may be limited by tighter Irish supplies, particularly for the first half of the year. Demand for imports will of course depend on how COVID-19 is managed domestically and how eating-out markets recover.

For UK exports, volumes are expected to contract by a further 3% in 2021. This is due in part to lower domestic production. Trade friction at borders due to new customs checks are also expected to impede volumes somewhat in early 2021. In addition, shipments will be influenced by how export markets recover from COVID-19. Foodservice markets across Europe have been hugely disrupted, and will take time to recover. Furthermore, if increased interest by UK retailers in stocking home-grown product continues, this may also limit supplies available for export.

Price outlook

While GB cattle prices have entered 2021 in a generally strong position, there are several factors that may have a bearing on prices moving forward. On the one hand, data pointing to tighter cattle supplies in both GB and Ireland may be positive for domestic cattle prices in the short-term. In addition, data from last year has shown that restricted foodservice activity drives higher demand at retail, which benefitted farmgate prices in 2020.

On the other hand, continued economic uncertainty and the prospective end of furlough schemes may lead to many consumers tightening their belts, potentially opting for cheaper cuts. As we saw last year, similar behaviour caused initial problems for the carcase balance and thus, prices. How, and how quickly, the country emerges from a lockdown situation, and how the eating out market re-opens going forward will be crucial factors to watch.

Input prices will of course be another key watch point for producers, and they can be as influential as finished prices on margins. We take a closer look at key farm inputs elsewhere in our Agri-Market Outlook, which you can find here.

Beef consumption trends

Beef has proven to be an important staple for consumers at home during the COVID-19 outbreak, with the greatest volume increase in retail of all the proteins, at +11% (Kantar, 52 w/e 27th Dec 2020). For beef, the largest actual growth in retail volumes was around mince, burgers and steak. These cuts proved popular during a large part of 2020, with mince-based meals offering good versatility to consumers. The sunniest spring on record also helped kick off barbecue season early, boosting sales of beef burgers. This also helped reverse the trend of declining steak consumption in-home.

There were of course extraordinarily difficult out-of-home eating conditions during 2020, notably for steaks, considering their popularity when eating out. We estimate the eating-out market in 2020 for beef saw volume declines of -56% due to COVID-19 restrictions. In-home meals rose significantly during 2020 and consumers took advantage of more convenient options such as delivery and takeaway. However, closures of fast food chains at the start of lockdown resulted in a contraction of the market for beef during spring 2020. Despite this, we estimate overall beef delivery and takeaway volumes rose by +28% in 2020. The biggest contributors to this were burgers and beef-based Chinese dishes (Kantar Out-of-Home, 40 w/e 4th Oct 2020).

What next?

With national lockdowns introduced at the start of 2021, there is a further impact on foodservice volumes. We anticipate more of a return to eating out in the second half of 2021 but that the market will not fully recover to pre-COVID levels.

Beef is not predicted to maintain high retail growth in 2021, but we do expect it to track above 2019 levels. The strong volume growth in 2020 was partly triggered by consumers’ uncertainty and subsequent panic buying. This trend is not isolated to beef, as there are similar reductions in the outlook scenario vs 2020 for pig meat and lamb.

Overall, beef volumes for the full year 2021 are expected to fall 3% year-on-year. However, when we compare back to 2019, being a more typical year, we expect volumes to stand-on. In-home occasions are expected to remain raised from typical pre-COVID levels, but easing further into 2021 in line with foodservice openings. The performance of steak may be heavily linked to the ability of foodservice re-opening, while cuts offering versatility and inspiration to consumers are likely to appeal in-home. Sensitivity towards price is likely to remain high as economic ripples are felt by consumers. Communication around quality and key product benefits will be important as shoppers evaluate their purchase decisions closely.

To mitigate losses:

  • Inspire consumers to replicate food service experiences at home, as demonstrated in AHDB’s beef steak night campaign
  • Encourage shoppers to purchase cuts that will help with carcase balance issues, particularly those with higher price points, by utilising an effective price and promotional strategy
  • Inspire stews/casseroles during the critical Autumn/Winter periods, playing on affordability and health. These dishes can also offer good value for consumers who are sensitive to price and looking for economical meals
  • Address health concerns by communicating the health benefits of beef
  • In the longer term look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship and expertise) are shared with consumers

For more information on the scenario please click here

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Hannah Clarke

Analyst - Livestock

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Beef & Lamb: At A Glance

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Here you'll find more detail on production, trade and demand.

Beef market outlook

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Gallery: Beef & Lamb at a glance

Click on the thumbnails below for simple visual explanations as to how the beef and lamb markets have performed, according to the latest data. Here we look at GB and international prices, consumption, slaughterings and trade figures.

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