Exceptionally tight supplies of finished cattle have seen beef prices in Britain increase over the past week.

Finishers are now receiving £3.40/kg for R4L steers or the equivalent of €4.31/kg inc VAT. Industry sources believe tight supplies will drive prices above £3.50/kg, €4.38/kg inc VAT, within a matter of weeks. The most recent figures show the prime cattle kill in Britain to be running 13.3% down on the previous year with steers down 12.2% and young bulls down 28.8%.

The same upward trend is evident in Northern Ireland (NI), albeit from a lower starting point. Over the past week prices have increased by 6p/kg with in-spec R grades selling from £3.28 to £3.30/kg (€4.13/kg). Year to date the steer kill in NI is down 11.3%; the heifer kill is down 14.8%.

With Britain the largest export market for Irish beef, consuming almost 50% of total exports, the upward price trend and drop in throughput is positive news for finishers here. However, the challenge is to ensure improved market conditions translate into higher prices. The first step is to ignore the negative price propaganda being used by some factories as justification for pulling the quoted base price to €3.90/kg for steers. Conditions have improved significantly in our main export market and, with the weekly kill running 16% down on the same period last year, Irish factories are anxious for stock.

On this basis farmers are well positioned to reject the lower quotes and attempts by factories to pull prices below €4/kg.

On the ground: Quotes are lowest in the southwest of the country where a base price of €3.90/kg for steers and €4.00/kg for heifers is being quoted. Unfortunately, the lower quotes seem to be an attempt to reduce the premiums being paid on Aberdeen Angus (AA) and Hereford stock. While agents are refusing to pay above the quoted price for stock eligible for bonus payments, animals outside these schemes are freely securing from 5-10c/kg above the base. As a result, most steers in the south continue to be purchased from a base of between €3.95/kg and €4.00/kg. At the lower quotes farmers with steers eligible for the AA premium are securing a base of €4.15/kg when bonuses are included.

Further into the midlands a base of €4.00/kg is more freely available but there are farmers accepting €3.95/kg. The general quote ranges from €3.90 to €3.95/kg. Farmers opting to sell flat are securing from €3.95 to €4.00/kg for R grades with O grades moving at €3.85 to €3.90/kg.

There is significant variation in the base price paid for heifers. In the south of the country the bulk of heifers are moving at a base of €4.05/kg while further north €4.10/kg is freely available. With supplies tightening there are reports of heifers being slaughtered today at a base of €4.15/kg. Butcher type heifers are moving at €4.10/kg.

While some factories are quoting as low as €3.90 and €4.00/kg for R/U grading bulls up to €4.10/kg continues to be paid flat for R/U grades. O grade bulls continue to move from €3.85 to €3.95/kg.

In-spec: Factories are using the lower quotes as a tool to penalise farmers for out-of-spec stock. In most cases farmers with in-spec animals are able to secure from 5-10c/kg above the quote with some farmers securing 15-20c/kg above the quoted price for in-spec bulls.

Weight and age are the main issues for bulls while there are reports of increased numbers of steers and heifers grading over-fat.

Factories are trying to increase the premium for steers over bulls. With some factories quoting just €4.00/kg for U grade bulls, the equivalent grading steer is attracting a premium of 24c/kg.

Contracts: It is important to note that factories are continuing to purchase a significant proportion of their weekly kill on contract. Prices range from €4.10 to €4.15/kg as a base price for steers and €4.20/kg for heifers. Others are operating on an 8-10c/kg premium above the average price paid by the top five factories.