The London Olympics and Queen’s Diamond Jubilee Bank Holiday will give Brits even more of an excuse than usual to enjoy a few beefburgers and steaks on the barbecue.

But tighter beef supply and higher wholesale prices could mean plans for a barbecue summer go up in smoke. Higher on-farm cattle feed prices - which have risen 32% over the past two years to £250/t - coupled with higher deadweight prices at slaughter, up 23% to £3,050/t this April compared with two years ago, have caused producers to send more cattle to slaughter younger to maximise profit and reduce cost exposure.

Farmers have also invested in fewer replacement cattle, so there is less chance of EU herd numbers being maintained. The EU beef herd already fell 1.7% year-on-year to 12.1 million in 2011 [European Commission].

Basmati has risen sharply over the past month and, at £558.2/tonne, it is currently 10.5% more expensive than this time last year.

Rice prices have moved up largely because of increased demand from the Middle East and West Asia. India is forecast to export about 2.5 million tonnes of basmati rice this season, with most of this tipped to go to Iran and Iraq. Greater rice export volumes are also expected from Bangladesh, further depressing prices.

Meanwhile, cocoa prices have continued to fall, driven in part by plentiful rain in Ivory Coast. Cocoa butter is now nearly 50% cheaper than last year and down 20.9% over the past month, with powder and beans falling by about 10% month-on-month. 

The cumulative effect of these on-farm actions has been a shortage of slaughter-ready cattle this year and a reduction in beef volume produced. EU beef production is expected to shrink by 2% in 2012 if grain and deadweight slaughter prices remain high. Given it takes two years to get a cow ready for slaughter, supply is unlikely to ease in the short term.

To compound the higher wholesale prices already seen, in November last year, scientists identified the Schmallenberg virus, which causes fever, lower milk production as well as abortion and still births in cattle, sheep and goats. Schmallenberg’s impact on calving rates has yet to be seen, but as the gestation period for a cow is nine months, it could spark a further fall in the supply of beef in Europe.

Of more immediate concern is the drought in parts of the UK. The low levels of rain this year and last could limit grass growth, and require increased feed and meals instead of grass for their cattle, threatening even further wholesale price rises.