Factories look ahead as quotes fall

By Justin McCarthy

The recent attempt by factories to pull quotes is part of a long-term plan to try and control prices throughout May and June.

They realise that cattle supplies are going to get very tight over the next few months and are using this week, when some farmers are anxious to sell, to try and drag down prices. It is like a yo-yo. The further down the yo-yo goes, the longer it will take for it to come back up to the starting position. Similarly, the further down factories get quotes over the next few days, the longer it will take for them to come back up to where they started.

Factories adopted this yo-yo policy six to eight weeks ago, which allowed them buy cattle during the month of April at similar prices to what they were paying in February. How effective the policy is this time around will depend on how easily farmers part with cattle. It is worrying to hear farmers talking of "getting rid of the last of the shed cattle'' - hardly a strong selling position to be going to a factory agent with.

For the next eight to 12 weeks, the supply of finished cattle is in the hands of a small number of specialised finishers who, due to the level of demand for beef, can control the selling price. They must demand a price that will deliver a viable return and not allow themselves buy into food inflation propaganda. Food inflation is an irrelevant argument while finishers continue to produce at a loss and retailers generate billions of euro in profits. Finishers must demand a higher percentage of the retail value.

On the ground: In the northeast, the bulk of steers are being purchased from a base of 342c/kg R grades. O grades are selling from 330-336c/kg with U grades at 347c/kg. There are reports of a number of farmers in the midlands having secured 347c/kg flat for R/U grade steers. In the northwest, 344c/kg and 353c/kg is being paid for R and U grades respectively.

Farmers in the west are struggling to secure above 330c/kg, 336c/kg and 342c/kg for O, R and U grades respectively.

Cattle supplies are reported to be very tight in the southwest and, while there was an attempt to pull the base price for R grades back to 336c/kg over the weekend, factories have to revert back to 342c/kg to secure adequate supplies. O grades are being purchased at 330c/kg, with P grades selling from 320-325c/kg.

In the southeast, while most R grade steers are being purchased at 339-342c/kg, some soft sellers have sold at 336c/kg for Rs and as low as 325c/kg for Os. O grades are generally being purchased at 330c/kg.

The trade for heifers and bulls has remained steady over the past week. Good quality R/U grading heifers are selling from 350-353c/kg while O/R grade butcher types are selling for 342c/kg. The general run of quotes for R/U grading bull is from 347-353c/kg with 353c/kg having been paid flat for mixed loads.

The cow trade is strong. In the south, P+/O grading cows are selling from 294-297c/kg while further north up to 305c/kg has been paid. In the west prices range from 297-302c/kg. Better quality continental cows are selling from 308-314c/kg.

NI: Beef prices were steady over the past week, with most plants holding quotes at 260p/kg for U grading steers. Cows are selling for 185-204p/kg (243-268c/kg inc VAT). Factory agents for southern plants are reported to be active in the north, paying the equivalent of 353c/kg for R/U grading steers.

Age limit increase

The European Commission has adopted a regulation to increase the age limit at which the vertebral column must be removed from beef carcases from 24 to 30 months. The 24-month limit restricted butchers in Ireland and on the continent to buying carcasses under 24 months old. This was one of the main reasons why in the latter half of the year factories paid premium for heifers under 24 months. The butcher trade will now be allowed to handle carcases from heifers slaughtered under 30 months.