After experiencing severe shocks and high volatility in the previous years, European Union (EU) agricultural markets are showing positive signs of stabilising. Published recently by the European Commission, the autumn 2024 edition of the short-term outlook report for EU agricultural markets presents the latest trends and prospects for key agricultural markets. The report points out that agricultural markets are starting to stabilise as input costs have been on a downward trend, and food inflation has returned to a moderate rate.
The general food price environment is indicating potential improvements in demand for agri-food products across most sectors. However, this positive outlook is still subject to a high level of uncertainty, influenced by factors such as weather events, geopolitical conflicts, and the emergence of animal and plant diseases. Despite these challenges, food inflation has been declining, and food prices have generally remained stable in recent months, albeit being on average 32% higher compared to 2020.
Adverse weather conditions have been a major concern, impacting the production and quality levels of major arable crops. The EU fertiliser market, on the other hand, is gradually stabilising, with trade flows returning to normal and domestic production showing signs of recovery. Nevertheless, farmers are still facing affordability issues, particularly due to declining prices of arable crops.
The lower crop yields in various regions of Europe in 2024 could potentially lead to cash flow problems for arable crop farmers, affecting fertiliser purchases in the upcoming spring of 2025. The current estimates for the 2024/25 EU cereal production stand at 260.9 million tonnes, approximately 7% below the five-year average, marking the lowest production in the last decade. Unfavourable weather conditions and a reduction in cultivated area due to factors like excessive rain have contributed to this decline in production.
Among the affected crops, soft wheat and maize have been hit the hardest, while oats, barley, and durum wheat have seen production increases. Additionally, there has been a notable 12.6% year-on-year increase in the production of protein crops, driven by field peas and broad beans. Despite these challenges, animal feed consumption is expected to remain stable year-on-year, reflecting a stagnation in EU animal production.
The ample availability of feed wheat presents opportunities for domestic livestock producers to reduce their reliance on imports. However, issues related to the quality of harvested soft wheat, including lower test weight of grains, need to be addressed. Looking ahead to the remainder of 2024, a decline in the Irish milk supply is anticipated due to the adverse impact of wet conditions on pasture carrying capacity. On a broader scale, EU milk supply is forecasted to see a marginal increase in 2025, assuming normal weather conditions.
In terms of EU meat trends, there is a continued structural adjustment leading to an expected 1% decline in EU beef production in 2025. The report highlights a drop of 1.7% in EU per capita beef consumption in 2024, with further declines projected for 2025. Despite this consumption trend, EU beef production witnessed a 3% increase in the first half of 2024, driven by substantial slaughtering in countries like Italy and Poland.
Factors contributing to this increase include poor grazing conditions in central Europe and growing demand in certain export markets such as Turkey. However, a slight decline in beef production is expected by the end of 2024 due to a shortage of young bovines in some EU countries. Importantly, beef imports from Brazil have significantly decreased, while imports from the UK have also seen a slight dip.
Looking ahead, a further decrease in beef production and meat imports is anticipated in 2025, influenced by factors such as lower production levels in Brazil. Similarly, live animal exports are expected to decline by 2% in 2025. The report also notes a potential decrease in UK pigmeat demand in 2025, which could lead to a 2% decline in EU imports.
In the realm of EU sheep and goat production, a 7.4% decline was observed in the first half of 2024, mainly due to the continuous structural decline of goat and sheep flocks, adverse weather conditions, and limitations on grass availability. Disease outbreaks in herds across western EU member states may further impact the availability of animals for slaughter by the end of the year. Despite high prices, EU sheep and goat production is expected to fall by 5% in 2024, followed by a 1% drop in 2025.
As the EU agricultural markets gradually stabilise, it is essential for farmers and stakeholders to adapt to evolving conditions and market dynamics. With uncertainties still prevalent, staying informed and prepared can help mitigate risks and capitalise on opportunities within the sector. By closely monitoring market trends and leveraging available resources, businesses can navigate the shifting landscape of EU agricultural markets.
In conclusion, while challenges persist, the positive signs of stabilisation in EU agricultural markets offer a glimmer of hope for the industry. By addressing issues such as weather-related disruptions, input cost management, and market demand fluctuations, stakeholders can work towards a more resilient and sustainable agricultural sector. As the sector continues to evolve, proactive decision-making and strategic planning will be crucial for ensuring long-term growth and prosperity in EU agricultural markets. Subscribe to Cattle Weekly’s Newsletter for more insights and updates on the agricultural industry.
