Analysis of MartWatch data from January to June 2014 has shown that despite the beef price falling by 20-25% during the period, weanling prices remained firm across the marts.

The average 350kg weanling bull sold for €2.25/kg on average in the first half of 2014, just 4c/kg less than the same period in 2013. This translates to a reduction of €12.80/head on average, or a fall of just 1.6%. The average 250kg weanling bull actually saw average prices increase by a negligible 1c/kg in the same period.

The impact of tightening factory specifications has resulted in a strong trade for heifers. As a result, average prices for heifers under 300kg increased by 10c/kg, or €35/head. Heavier weanling heifers from 300kg to 400kg saw prices remain similar to the same period last year with just a slight increase of 0.3%.

It is clear that farmer sentiment underpinned the weanling trade in the first half of the year. This may be due to the hope for improved beef prices, combined with the prospects of tightening cattle supplies next year. However, with weanling prices at current levels, it is feared by some that average prices will come under some downward pressure in the coming months as sales gain momentum. It should also be stated that after an excellent grass-growing year, cattle are weighing heavier than previous years, which should offset some of the reduction in prices.

Store bullocks back €108/head

Forward store bullock prices have dropped by 9.6%, or €108/head for the average 550kg steer, when compared with the same period in 2013. This was a direct impact of a more difficult beef trade. Store bullocks from 400kg to 500kg have seen prices drop by just 5.2%, or €50/head in the same period. Bullocks are not the only class of cattle that has been hit. Store heifers from 400kg to 500kg have seen prices drop by 4.3% or €43/head on average, while heifers from 500kg to 600kg have seen prices drop by €50/head, a drop of 4.5%.

Quality Payment Scheme

The beef trade has been the main reason behind the fall in the store trade. A weakening beef price, and a high percentage of cattle not achieving Quality Payment Scheme (QPS) bonuses due to the failure to meet carcase specification, have been the main reasons for the drop in average prices. There has been a clear move by farmers to purchase younger store cattle. In addition, in recent months there has been increased farmer demand for store heifers over bullocks as farmers try to tap into premium beef prices and avoid having out-of-spec stock. The result has been a lesser reduction in the prices for heifers (4.5%) versus the equivalent store bullock (9.5% reduction).

Store bullocks approaching 30 months of age, dairy-bred stock, and animals with four movements or more have taken the brunt of price pressure since spring.

Farmer activity has resulted in cattle that will not meet the QPS requirements receiving price penalties of over €100/head on the equivalent cattle in marts. Likewise, lesser-quality cattle, particularly Friesians, have been hit with low demand and poor prices.

The impact of out-of-spec stock was not restricted to the store trade. Heavy weanling bulls took a severe hit in the first half of 2014. The impact of beef price cuts for aged and out-of-spec bulls resulted in low demand for bulls over 400kg. In many cases, only specialised finishers and exporters were active for these types. Prices averaged at €2.14/kg in the first half of 2014 compared with €2.24/kg in the same period in 2013. This equates to a drop of €45/head on the average 450kg bull.

Ahead of five-year average

Despite a weaker first half to the year’s trade, when we look at the average price paid for cattle this year compared with the average price over the last five years, this year’s prices are still well ahead. Strong farmer demand for heifers resulted in the prices of both store heifers and weanling heifers remaining 6.5% ahead of the five-year average. However, the impact on the beef trade has resulted in store bullock prices resting at just 2.5 to 3.3% ahead of the five-year average.

When we look at prices on a year-by-year basis, it is evident that 2014 prices are the third-highest over the five-year period, with prices peaking in 2012 and falling slowly since then. It is worth commenting that the average price paid in 2010 and 2011 was significantly weaker than that paid in 2014 due to high supply levels and low demand.

Cow prices weaken

The more strict enforcement of the 70-day final residency rule pre-slaughter resulted in reduced numbers of factory-fit stock passing through marts. This was particularly the case for factory-fit cows. This was complemented by strong entries of feeding cull cows flowing through marts, much like last year. However, prices were not quite as strong.

In the first half of 2013, short-keep and slaughter-fit cows sold mainly from €1.90/kg to €2.10/kg, with U+ grades making as much as €2.20/kg. The beef woes of 2014 saw demand wane and prices reduce gradually from the start of the year onwards. As a result, prices of €1.70/kg to €1.90/kg were more common, with top quality U+ cows making €2.00/kg.

Quality in focus

The more difficult beef trade, particularly for lesser-quality stock, combined with an increased focus on meeting carcase specification, has resulted in a widening in the price differential between the top and bottom 33%.

Although the MartWatch analysis for the first six months of the year has shown only a modest increase in the differential, in recent months it has been much more evident. Lesser-quality continental and Friesians have been worst hit by reduced demand. However, the Angus and Hereford bonus schemes have resulted in a strong and steady trade for Angus and Hereford dairy crosses.

The fallout from the issues surrounding the slaughter of Friesian bulls and steers has led to a sharp fall in the prices of lesser-quality stores an weanlings. The average price for the bottom 10% of weanlings from 300kg to 400kg in 2013 stood at €1.45/kg. In the same period this year the prices averaged at €1.39/kg, a drop of 16c/kg or €56/head for the average 350kg Friesian. In some cases, the prices for these types were back 20-30c/kg on the same period last year.

Calves

Calf prices weakened considerably, which resulted in a sharp increase in exports. To the end of June 2014, 99,199 calves were exported, up 15.7% on 2013 and 193% on 2012. Prices of Friesian bulls ranged mainly from €80 to €100, a drop of €50-€60/head. Again, the Angus and Hereford bonuses underpinned demand for those types, yet prices dropped by a similar level.