Factory prices for finished cattle are currently running 40p/kg to 50p/kg ahead of the same period last year, with U3-grading animals at 370p/kg to 380p/kg.

Last December, base quotes ranged from 326p/kg to 330p/kg, with price deals of 6p to 10p/kg on offer for in-spec animals.

On a 380kg steer carcase, the current price differential is worth an additional £152 to £190 per head.

While higher beef prices are very welcome, this does not automatically mean beef finishers are making higher profits on finished animals.

Input costs have increased significantly. Store cattle purchased in marts have also risen by 30p/kg to 40p/kg, with good-quality continental animals consistently making 210p/kg to 240p/kg.

Feed price rise

Feed prices are also up, rising by £25/t since September, with current rations costing £25/t to £30/t more when compared to last December.

So what does the increase in feed prices mean for farmers killing intensively finished cattle over the coming months?

Steers

Take the example of a farmer with two groups of steers. The first group was purchased on 1 September, and the second group on 1 December. In both cases, the cattle are to be killed after 90 days.

For the first group, concentrate was bought in September at £205/t. Assuming the cattle eat 8kg/day, the steers will consume 720kg at a cost of £148/head.

For those purchased on 1 December, a ration price of £230/t means feed costs are £18/head higher.

At an average carcase weight of 380kg, a finisher needs a 5p/kg rise in beef price to cover the higher ration price, and maintain the same profit margin between both groups.

Spring-born bulls

With feed prices unlikely to fall during the first half of 2021, farmers killing spring-born bulls next June will see a major rise in finishing costs when compared to the previous year.

Assuming an average ration price of £230/t from 1 November to 1 June, and bulls consuming 1.6t/head during the housing period, purchased feed cost comes to £368.

For bulls fed under a similar regime from November 2019 to June 2020, at an average ration price of £205/t, feed costs amounted to £328, which is a difference of £40/head.

At a carcase weight of 380kg, farmers require an additional 10p/kg in beef price to cover higher ration prices, and maintain a static profit margin.

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