Processors cut prices and adopt QPS-only policy

BEEF processors are in a happier position than they have been for some weeks, with the supply-demand trend swinging back on their side, at the expense of farmers.

The supply of cattle has further strengthened, bookings forward are reported to be strong, processors have increased the percentage of cattle being purchased on the QPS grid, and prices have been reduced.

The difference between prices in Ireland and Britain has widened further, with processors now buying Irish cattle for €150 per head less than the cost of a similar weight and grade steer in Britain.

Most processors have reduced their quotes by up to 3 cents/kg (1p/lb) this week, bringing the price cut over a fortnight to 10 cents/kg (3.5p/lb).

While a base price of up to 303 cents/kg (107p/lb) is available this week, it is difficult to get a price above that, with most processors hoping to get sufficient cattle at a base price of 300 cents/kg (106p/lb).

Heifer prices stay 6 to 8 cents/kg (2p or 3p/lb) ahead of steer prices in general, although a number of processors quote for heifers at the same price as steers this week.

The intake has increased to more than 10% above the critical 30,000 head level, which marks the dividing point between control of the trade by processors or by cattle sellers.

Intake at the plants last week topped 33,300 head, up nearly 2,000 head from the previous week.

Accompanying price cuts is a major swing towards the QPS grid, still opposed by many cattle farmers. Very few processors seem willing to do deals off the grid since the beginning of the month. This policy inflicts a double adverse price effect on cattle sellers whose cattle do badly on the grid.

Although cattle supplies have picked up, processors seem eager to agree contracts with cattle farmers for supplies in December and January, and seem willing to commit to very strong base prices, and to guarantee higher prices if dictated by future market trends.

Cow prices have eased a little, but remain firm overall, at a base of 241 to 246 cents/kg (86p to 88p/lb).

The beef trade in Britain is reported as steady, with further seasonal switching from steak cuts to roasting and forequarter cuts. Cattle prices have improved, with R4L grade steers averaging Stg274.3 pence/kg, equivalent to 346 cent/kg (123p/lb), including VAT.

On the Continent, the beef trade has been steady as demand held up well across most key markets. Some seasonal switching from more expensive cuts to forequarter cuts was reported.