EU beef production and trade down

Thursday, 27 August 2020

Both EU beef production and trade were lower during January-May this year compared to last.

Production lower

According to the European Commission, the EU produced 2.7 million tonnes of beef in the first five months of 2020, down 5% (145,000 tonnes) on year-earlier levels (latest data available, excludes UK). Production in the bloc was generally steady until April and May, when output fell by 13% year-on-year, likely due to coronavirus-induced disruption of supply chains.

Production was lower across nearly all countries, including the majors (France, Germany). The largest decline in production during the period was in Italy, which produced 50,000 tonnes (16%) less beef than the same period last year. Italy’s beef sector would undoubtedly have been constrained following the strict lockdowns that were put in place in response to the coronavirus, being one of the first EU member states to do so.

Trade constrained

Lower production has largely been matched by a fall in exports from the bloc, which for the five-month period were down 4% compared to 2019 at 282,300 tonnes. A fall in shipments to the UK was the main driver of export decline, primarily in volumes sent from the Republic of Ireland. EU shipments to several smaller destinations grew, including China, Canada and Japan, but not by enough to offset the loss to the UK.

Turning to imports, for January-May (inclusive) the EU received 21% (29,800 tonnes) less product from third countries. Imports totalled 110,300 tonnes for the period, largely affected by lower volumes from the UK. Less product was also received from South America, particularly during April and May. China has been drawing more product from the key South American exporters (Brazil, Argentina, Uruguay), which may have limited volumes into the EU. Lower import demand due to disrupted domestic demand may also have contributed.

Prices now on the rise

For the first five months of the year, cattle prices across the EU and in the UK had generally been on a downward trajectory (particularly between March-May), likely reflecting supply and demand changes caused by coronavirus. Since May, prices have largely been recovering, potentially with easing lockdown measures, and improving foodservice demand. Lower imports and production may also have contributed.

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