Agricultural markets are at long last showing positive signs of stabilising in the European Union (EU) following several years of volatility.

That was the good news story from the autumn short-term outlook report for EU agricultural markets, published earlier this week, in which it states: 'input costs have steadily declined over the past months and food inflation has returned to a moderate rate.'

The general food price environment points to possible improvements in demand for agri-food products in most sectors. However, it also stressed that much depends on weather events, geopolitical conflicts and animal and plant diseases.

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While food prices remain on average 32% higher compared to 2020, it says food inflation has been declining, and food prices have remained relatively stable over the last few months for most products.

Furthermore, prices have been maintained despite adverse weather conditions which have proved to be more frequent and damaging, affecting production and quality levels of major arable crops.

The EU fertiliser market is also gradually stabilising, with trade flows returning to normal and domestic production showing signs of recovery.

Nevertheless, affordability remains a concern for farmers, primarily due to declining arable crop prices.

Lower crop yields in different regions of Europe in 2024 could cause cash flow issues for arable crop farmers too, potentially affecting fertiliser purchases in spring 2025.

The 2024/25 EU cereal production is estimated at 260.9mt – roughly 7% below the five-year average – which represents the lowest production in the last decade. This is caused by unfavourable weather conditions affecting yields and, in part, by a reduction in cultivated area due to, among other things, excessive rain disrupting planting.

The most affected crops are soft wheat and maize, while oats, barley and durum wheat production increases. Production of protein crops increases of 12.6% year-on-year, driven by field peas and broad beans.

Animal feed consumption is expected to remain stable year-on-year, reflecting stagnating animal production in the EU. Ample availability of feed wheat is nevertheless providing good opportunities for domestic livestock producers to rely less on imports, given certain problems with the quality of harvested soft wheat (including lower test weight of grains).

However, the wet conditions and pasture carrying capacity are expected to affect milk supplies in Ireland, which are predicted to fall.

EU milk supply are forecast to increase marginally in 2025. Assuming normal weather conditions, the continuous decline in the dairy herd (-0.7%) is expected to be counterbalanced by increasing milk yields (+1%).

EU meat trends

Beef consumption in the EU dropped by 1.7% per capita in 2024 to 9.6 kg and it’s expected to fall further in 2025, by 1.2%. Increased slaughterings in the first half of 2024, have increased beef production by 3% too. Most of the slaughterings were in Poland which saw a 20% rise, with Italy seeing a 9% increase on the year which is thought to be caused by bad grazing conditions in central Europe and a growing demand in certain export markets (Turkey).

However, by the end of 2024, beef production is expected to decline slightly (-0.5%) due to a shortage of young bovines in some EU countries (e.g. Italy and Spain).

Beef imports from Brazil decreased substantially (-15%), while imports from the UK were 0.2% down.

According to the report the main exporting beef countries in South America are sending more product to the United States where there is more of a premium to offer due to relatively tight global supplies

Meat imports to the EU are expected to fall another 1.5% in 2025 and exports of live animals are forecast to fall a similar amount. Overall, exports of live animals are expected to decrease by -2% in 2025 year-on-year.

Sheep numbers down

Despite record high prices, overall EU sheep and goat production is expected to fall by 5% in 2024, with a further drop of 1% predicted in 2025.

Production has already declined by 7.4% in the first six months of 2024, year-on-year, driven by the continuous structural decline, unfavourable weather conditions and grass availability. Disease outbreaks are also expected to affect the availability of animals for slaughter by the end of the year.

Looking at pigmeat, falling demand in the UK could see EU imports decline by 2% in 2025.