Declining kill forcing factories to raise prices
Things have got a bit tricky on the cattle front for the factories. Weekly kill numbers have receded from around 37,00038,000 a month ago to 34,202 for the week ending March 10.
The factories still like to give the impression that they are in the box seat, but control of pricing has moved decidedly in the farmers’ favour.
That said my quest for accurate pricing/quotes over the weekend left me with a raft of different offers and tales of deals done during a week where agents couldn’t sleep for fear their opposition might offer more money before they could get their stock away.
That said, when you’ve lifted your offer by 10c/kg on the previous week you might not sleep anyway. Demand remains constant but supplies have tightened. And what’s being paid is a bit all over the place.
At the bottom end one agent operating for a major processor told me he did not have to give any more than €5.05/kg bullocks and €5.10/kg for heifers last week, as all the cattle he bought were entitled to a factory contract bonus of 20c/kg plus 20c/ kg quality assurance — so a final price of €5.45/kg and €5.50/kg, respectively.
Fortheordinaryfarmeroutside these arrangements, quotes for bullocks are mostly €5.10-5.15/kg to a top of €5.25/kg, with heifers €5.15-5.20/kg, and up to €5.30/ kg offered by some smaller operations — plus an additional 20c/kg quality assurance added in all instances for QA stock.
Flat pricing is still a major factor for those with Hereford and Angus, with up to €5.60/kg secured by regular suppliers, and less regular suppliers on €5.505.55/kg.
So while factories can claim that base prices as low as €5.05/ kg for bullocks and €5.10/kg for heifers were accepted last week, the reality for the normal non-contracted producer is closer to €5.15/kg and €5.20/kg respectively.
The biggest lift, however, has come among cull cows, with upwards of €4.70/kg being offered for full loads of well-covered O grades.
The agent who provided me with this price explained why his plant was now willing to pay what appeared to be a premium for O grade cows: “We can get canners at low money (€2.002.50/kg) but it’s down to meat yield and your well-fleshed tight O grade cow is the best option, especially when you compare her to what farmers now expect to get for bullocks and heifers.”
For the farmer with a handful of O grades, quotes yesterday varied from €4.30-4.40/kg, with better-fleshed P grades on €4.10-4.15/kg.
The young bull trade is also improved, with quotes for under 24-month stock varying from €5.40-5.35/kg for U grades to €5.30-5.35/kg for R grades.
Demand for manufacturing beef lifted U and R grade bulls under 24 months to flat prices of €5.35/kg in places.
Under 16-month bulls are working off a grid base price of €5.15-5.20/kg.
Quotes for under 24-month Friesian bulls appear fixed at €5.00/kg for Rs, with Os on €4.90/kg.
Meanwhile, it’s easy to overthink the effect of the St Patrick’s Day, Good Friday and Easter Monday bank holidays on prices.
But with numbers tightened and demand strong, there appears to no threat. Also, with mart numbers of heavy cattle dwindled to the point some sales yards reported no beef at all last week, Easter appears set fair for the finisher.
On a separate note, I question in my mart report the viability of farmers paying €4.00-5.00/kg for organic stock just to draw subsidies. It’s only fair to point out that the factory price for organic beef is currently €5.95/kg.