Ringside comment: quality in demand as beef prices approach peak
While good quality cattle have seen prices strengthen, plainer types are a little easier.

The past week has been another strong week in terms of the prices paid for good-quality cattle at the marts.

However, in recent weeks, there seems to be more plainer cattle coming through the system and less better quality suckler-bred types.

While average prices in MartWatch are down, many mart managers have commented that the prices paid for good-quality continental stores has actually strengthened slightly, especially forward store types, with specialist finisher demand underpinning the trade for short-keep types.

Farmer demand for stores is said to be quite solid too, with farmers still actively sourcing cattle. The largest decrease in the quality of stock on offer has been in the weanling rings, where a greater proportion of the trade is now made up of dairy crosses. While beef prices are probably at or approaching peak, this has had a positive effect on the cull cow trade, with extremely strong demand for all forward and short-keep cows.

Steers

Heavy store bullocks over 600kg are selling from €2.10/kg to €2.25/kg on average, with U grades selling from €2.40/kg to €2.50/kg. Forward stores from 500kg to 600kg are steady, selling mainly from €2.20/kg to €2.40/kg with plainer types from €2.00/kg to €2.15/kg. At the top of the market, there are some U grades selling from €2.60/kg to €2.70/kg. Light stores from 400kg to 500kg are selling from €2.20/kg to €2.30/kg for continentals. Angus- and Hereford-crosses are selling from €1.80/kg to €2.10/kg, with Friesians a little easier.

Heifers

Mart managers have said that the number of heavy heifers on offer are very low, with finishers having snapped up as many as they could in the past two months. Where those from 500kg to 600kg are on offer, they are selling from €2.20/kg to €2.35/kg for average-quality types and up to €2.80/kg in some cases for U grades and E grades. Lighter stores from 400kg to 500kg are still being met with good farmer demand, which is matching the supply. Prices are averaging at €2.30/kg, with the bottom third making about twice the weight.

Weanlings

Weanling prices have been more variable than stores. This is dues to a greater proportion of dairy-crosses on offer and less suckler-bred weanlings. Where Friesian bulls are on offer, prices of €1.50/kg to €1.70/kg are common for average- to good-quality types. Continental weanlings from 300kg to 400kg are selling mainly from €2.35/kg to €2.55/kg, which is similar to recent weeks. Top-quality bulls are making well over €3.00/kg. Heifer prices are about 10c/kg above the average bull price, mainly due to less dairy influence apparent.

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Beef trends update: extra 5c/kg up for negotiation
There is more competition among factory agents with throughput easing, while demand is holding relatively firm.

The beef trade is in a much better position than two weeks ago. Farmers have been under less pressure to move stock over the last 10 days and, as such, there is more appetite in the market, with factory agents having to work harder to source stock.

Independent plants with lower access to contracted or specialist-finisher supplies are the first to release the reins on price, with sellers with greater negotiating power securing an extra 5c/kg for heifers and steers.

This is witnessing base prices rise to €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.

Cows and bulls

The same can be said for cows and bulls, although factories are slow to increase prices.

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 16 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 with some specialist finishers with good bulls on hand now pushing for 5c/kg higher.

Cow prices have also steadied. The general quote for P+3 grading cows remains at €3.00/kg to €3.05/kg, but prices vary 5c/kg to 10c/kg either side of this range.

Average prices for O grading cows range from €3.10/kg to €3.20/kg, but there are more sellers now pushing prices to the €3.20/kg to €3.30/kg range.

Likewise, R grading cows range on average from €3.35/kg to €3.45/kg, but agents purchasing for cow-specialist plants continue to pay up to 5c/kg to 10c/kg higher, while U grades range from €3.45/kg to €3.60/kg and a top price of €3.65/kg, with good-quality continental cows in tight supplies.

Numbers on the ground

Last weekend’s beef insights article showed some 37,059 extra cattle processed to date in 2018.

A portion of this occurred as farmers took steps to deal with drought conditions, but higher numbers have been coming on stream throughout the year.

Analysis of the latest Department of Agriculture AIM data for beef and dairy males and beef-sired females are detailed in Table 1.

As can be readily seen, 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.

This is in contrast with the 12- to 18-month age category, where there were 29,486 additional cattle on the ground.

A significant reduction in dairy-sired cattle is balanced by a similar increase in beef-sired cattle stemming from greater use of Angus and Hereford genetics on dairy farms. This is also underpinning the increase in heifers.

A lighter carcase weight of these additional animals will reduce the volume of beef coming on stream.

The 18- to 24-month age bracket shows 14,498 fewer cattle and this is partly influenced by a switch back to bull beef production, while there was 9,716 extra animals in the 24- to 30-month age bracket, many of which are likely to have been processed in recent weeks.

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Heavy bullocks and heifers a strong trade but plainer cattle a hard sell

Beef kill exceeds 1m head as throughput rises 37,059
Throughput for the first seven months of 2018 is over 130,000 higher than the average for the last five years.

Beef throughput for the first seven months of the year has passed the 1m head mark and set a new milestone for the number of cattle processed in the first half of the year. As detailed in Figure 1, the kill for the first seven months of the year has increased by a massive 206,348 head over throughput levels recorded in 2012.

Throughput is also significantly ahead of 2017, with 37,059 more cattle processed.

The higher numbers are stemming from a combination of an expanding cattle herd, underpinned by expansion in the national dairy herd, and in recent weeks by farmers moving cattle in a bid to deal with drought conditions and conserve feed. The latter accounted for in the region of 16,000 head of the additional kill over the last eight weeks, when compared with corresponding throughput for 2017.

Table 1 details a breakdown of the kill by category of animal for the latest weekly kill and also tracks the differences in throughput for the first seven months of the year. The higher throughput in 2018 is driven primarily by heifers with 13,866 head more processed.

This is followed by 10,514 young bulls, which reflects a switchover by specialist finishers to bull beef – with the production system delivering significant benefits in terms of physical and financial performance. The cow kill is running 8,995 head above the corresponding week in 2017, with a closer look at throughput showing that the majority of this increase materialised in the last eight weeks. Reports pointed to much higher numbers of cows coming direct from dairy farms and while there were additional dairy cows processed, a major spike is not supported by the numbers analysed.

Forecast throughput

It is hard to accurately predict throughput levels for the coming weeks. A recovery in grass supplies has significantly reduced the immediate pressure on finishers to move stock. The drafting pattern will be influenced by growth rates in the coming weeks and the opportunity to replenish fodder reserves. There are already some reports of dairy farmers under great pressure culling empty cows on scanning, but if grass supplies recover this could be balanced by farmers milking on to try and maximise the milk cheque.

Reports suggest that there have been more cattle slaughtered at a younger age this year, which in theory could leave supplies for the back end tighter.

The contrasting view is that more producers introduced high levels of concentrates to underpin performance during the drought and will now continue feeding, while others may consider ad-lib feeding once animals are housed to conserve silage. A clearer picture will start to develop on the back of how growth rates perform in the coming weeks.