The beef trade is in a much better position than two weeks ago. Last week’s kill reduced by 3,794 head to 30,470 and while it was influenced by the bank holiday limiting processing to a four-day week, tighter supplies also played a significant part.
The trade has strengthened by 3c/kg to 5c/kg over the last week to 10 days, with independent plants with lower access to contracted or specialist-finisher supplies increasing activity in the market.
Sellers with significant numbers on hand and greater negotiating power are securing a base of €4.05/kg for heifers and €3.95/kg for steers. There are still significant numbers moving at a 5c/kg lower base but sellers should note they have more bargaining power in negotiations.
The same can be said for cows and bulls, with factories also keen to limit the increase in price. P+3 grading cows range from €3.00/kg to €3.10/kg with general prices for O grading Friesian cows ranging from €3.15/kg to €3.20/kg. Fleshed O=/+ grading cows achieving a heavier carcase of 280kg to 300kg plus are in cases selling to €3.25/kg to €3.30/kg.
R grades are averaging €3.45/kg with prices ranging from €3.40/kg to €3.55/kg. Supplies of heavy R and U grading cows are particularly tight with cow specialist plants paying up to €3.60/kg to €3.65/kg for top-quality cows.
Good-quality bulls less than 16 months and trading on the grid are selling from a base of €3.90/kg to €4.00/kg with the higher prices secured by specialist finishers. Some factories have relaxed weight restrictions and are paying the higher base to 420kg to 430kg to regular sellers when previously the higher prices were limited to bulls delivering a carcase weight less than 400kg.
A similar situation is evident with bulls over 16 months but less than 24 months, with R grades ranging from €3.90/kg to €4.00/kg while U grades range in price from €4.00/kg to €4.10/kg. Some specialist finishers with good bulls on hand are now pushing for 5c/kg higher.
The northern trade is steady, with base quotes ranging from £3.48/kg to €3.52/kg or the equivalent of €4.11/kg to €4.15/kg including VAT at 5.4%. Meanwhile, British beef prices appear to have steadied, with AHDB analysis showing R4L steers averaging £3.72/kg (€4.39/kg) and heifers £3.67/kg (€4.33/kg).
Numbers on the ground
The beef kill is running 36,273 head above the corresponding period in 2017. The increase has been taking place since the start of the year, with 15,864 extra cattle processed since the start of June.
Looking at the latest AIM data on 1 June shows there were 9,716 extra animals in the 24 to 30 month age bracket, many of which are likely to have been processed in recent weeks.
The 18 to 24 month age bracket shows 14,498 fewer cattle and this is partly influenced by a switchback to bull beef production and higher exports of continental cattle. The 12 to 18 month age category shows the greatest increase, with 29,486 additional cattle on the ground. Many of these are Angus and Hereford cattle from the dairy herd and a lighter carcase weight of these additional animals will reduce the volume of beef coming on stream.
Looking further down the supply chain, there were over 50,000 fewer animals in the zero to six month age category on farms on 1 June 2018 which can in turn be directly attributed to live exports of calves rising by a similar figure.