Air of confidence in the beef trade

By Justin McCarthy

While the disruption of the Easter break saw the beef trade remaining relatively quiet over the past week, there is the general expectation that a significant price hike may be on the cards.

A tight supply of finished cattle in Ireland, Britain and NI is the main reason for the air of confidence in the trade. Recent figures show Brazil has exported no beef into Europe during March and there is a general acceptance that exports are unlikely to resume in any significant volume this year. This will further fuel confidence in the domestic market.

Unfavourable exchange rates and steady beef prices across mainland Europe will see factories attempt to resist price rises. However, the tight supplies in Britain will prove a great ally to farmers in the coming months.

IFA National Livestock Chairman Michael Doran is also bullish on the outlook for cattle prices. He said cattle supplies tightened dramatically last week, with the kill down 20% to 24,205 head. Doran said this is the beginning of a trend that will see supplies of finished cattle becoming extremely tight over the coming weeks and months. He is confident prices will continue to rise.

On the ground: There are already indications that farmer confidence in the trade is justified, with many factories now buying steers from a base of 342-344c/kg for R grades. This sees O grades trading from 325-330c/kg, with U grades reaching 347-353c/kg. However, only farmers who are prepared to make the most of market conditions have managed to secure these prices. Weaker sellers are being quoted from a base of 336c/kg for R grades. A number of farmers are refusing to talk to agents until they offer a base of 350c/kg for R grades.

The demand for bulls and heifers remains strong and, while factories are quoting 342-347c/kg for R/U grades, a flat rate price of 350c/kg is widely on offer. There is also a strong trade for butcher-type heifers with O/R grades making 336c/kg.

The cow trade is steady, with dairy-bred cows selling from 286-297ckg, depending on weight. There is little more on offer for the better quality suckler cow, with 302c/kg being offered for R grades. Farmers with a few cows to sell should try the mart, as the trade seems stronger around the ring. Old stock bulls are selling from 210-224c/kg.

NI & Britain: Supplies of finished cattle have tightened dramatically up north and factories are being forced to abandon their attempts to pull prices. The U3 quote is back up to 250p/kg (335c/kg inc VAT), with up to 258p/kg (346c/kg inc VAT) being paid. Rumours are widespread within the industry that some of the NI plants have done deals for late April/May at prices in excess of 270p/kg (361c/kg inc VAT). Whether this materialises into hard cash for farmers outside the "inner circle'' will depend on how tight supplies get in Britain and the Republic. Signals from Britain are positive. Although two short weeks in succession have allowed factories to hold the R4L steer steady at 245-253p/kg (328-335c/kg inc VAT), there is widespread expectation that when normal service resumes next week, there will be a significant increase in prices.

Bull kill

Over the past two years there has been a significant increase in the number of male animals slaughtered as young bulls. During the first 11 weeks of this year, young bulls accounted for 21% of the male cattle slaughtered nationally. During the same period in 2007, young bulls accounted for 16% of the male kill. In 2006 they accounted for 12%. The young bull kill is running 21% ahead of 2007 figures and 58% (almost 14,000 head) above 2006 figures.

The steer kill is down 14% (21,084 head) on 2007. Overall, the national kill is running 10% behind 2007 figures.