Latest Agri Market Outlooks expect tightening supplies to continue to shape markets

We have published updated Agri Market Outlooks for the beef and lamb, dairy and pork sectors, with the forecasts highlighting the continued influence of tightening livestock supplies.

The updated analysis, which is designed to help levy payers understand the market factors likely to influence their businesses, points to constrained cattle and sheep supply underpinning market fundamentals over the coming years, despite ongoing pressure on consumer demand and wider economic uncertainty.

For the beef sector, UK production is forecast to drop to 896,000 tonnes in 2027, a decline of 0.8% compared with 2026. Increased carcase weights are expected to only partially offset lower cattle throughputs.

The latest sheep outlook also points to a continuation of tight supply conditions.

UK sheep meat production is forecast to decline through 2027 as lower slaughter numbers and a contracting breeding flock reduce domestic supply. Production is expected to drop by 2.4% to 262,000 tonnes.

Bluetongue remains a downside risk to sheep production forecasts. The disease has the potential to affect ewe fertility and future lamb crops, although the scale of any impact will depend on disease spread and vaccination uptake.

The updated outlook includes a production impact scenario to reflect this uncertainty.

Trade flows are expected to remain active. Beef imports are forecast to increase by 3% in 2026, with additional volumes weighted towards the second half of the year, while exports are also expected to rise by 3%, supported by a strong start to the year.

Despite robust demand for cattle and tight domestic availability, beef consumption volumes are expected to remain constrained as elevated retail prices continue to weigh on consumer purchasing decisions.

Historically tight supplies are expected to support cattle prices at elevated levels, although subdued consumer demand and a changing import mix could limit opportunities for significant further price growth.

Lamb demand is expected to remain under pressure from weak consumer confidence due to ongoing cost-of-living challenges, with consumption volumes forecast to fall in both 2026 and 2027.

However, strong EU import demand is expected to continue supporting UK exports, although lower domestic production may limit growth opportunities.

The outlook suggests that supply tightening across the UK, European Union and Southern Hemisphere will outweigh softer consumer demand, supporting firm GB lamb prices through 2027.

In our updated forecasts for the dairy and pork sectors, production in both sectors is expected to decline in 2027.

Breeding herds in both sectors are declining due to farm profitability challenges, with the war in the Middle East and other factors contributing towards increasing costs of production.

In dairy, GB milk production is forecast to decline by 2.2% during the 2026/27 milk season, with a further 1.1% decline anticipated during the first half of 2027/28.

Low forage stocks, falling cow numbers, rising production costs and disease risks are expected to weigh on output, particularly if milk prices do not sufficiently strengthen to maintain production levels.

Meanwhile, UK pig meat production is forecast to fall by 3.7% in 2027 to around 979,000 tonnes.

A reduction in the female breeding herd and continued pressure on producer margins is expected to limit supply, while exports are forecast to decline as less product becomes available for international markets.

Pig prices are expected to strengthen gradually as domestic availability tightens, although wider European market dynamics and rising input costs may temper improvements in profitability.

David Swales, Head of Economics and Analysis at AHDB, said:

"The outlooks reinforce the increasingly important role of supply in shaping market outcomes, particularly in the beef and lamb sectors. Tight cattle and sheep numbers remain a key feature of the market and are expected to continue underpinning prices over the forecast period.

"While we expect consumer demand to remain under pressure, reduced production in both the UK and key competitor regions is helping to support market fundamentals. At the same time, businesses will need to remain alert to a range of risks, including disease challenges such as bluetongue, changing trade dynamics and ongoing cost pressures."