Looks like 90 to 94p base for August
Processors generally had either settled on, or were edging towards paying 263 and back to 252 cents/kg (94p to 90p/lb) for R and O grades, likely to hold at least until the end of August.
The factories which paid at that level last week are unchanged this week, and a few others have slipped back to this level, by losing 3 cents/kg (1p/lb) off last week’s quotes, as 94p to 90p/lb becomes established as the price plateau for the moment.
There is a possibility that some factories may shave a further 3 cents/kg (1p/lb) off the price for R grade animals in the meantime, narrowing the price margin between R and O grades to 9 cents/kg (3p/lb). But the breaching of 252 cents/kg (90p/lb) for O grade animals is unlikely to happen before September.
Rumblings by farming leaders over the sharp decline in prices of the past month, and the comparison of returns to cattle farmers versus those in the UK, helped to make the processors a bit more cautious about inflicting further price cuts too quickly.
The benchmark of 252 cents/kg (90p/lb) for O grade animals is a bit like the highest jump on the course; they are all a bit nervous of breaching it, and being penalised for upsetting the boat. The factories are not looking forward to any disruption to the trade right now, because they need a steady supply of cattle. A supply famine now and a glut later in the year is not the ideal recipe for in handling the kill. Neither do farmers want disruption to the trade at this time of the year, so each side is maintaining a healthy respect for the other and they are all playing ball, at least until the end of the month.
There is up to 274 cents/kg (98p/lb) to be got this week for U grade animals, but these prices are slipping and some are back to 269 cents/kg (96p/lb).
Overall supplies are continuing very strong in the south, but they have settled into a steady flow in the rest of the country.
The cull cow trade has steadied, with prices being maintained at 202 to 190 cents/kg (72 to 68p/lb), with supplies having gone ahead of the corresponding weeks in 2003, at over 6,000/head per week now going through the factories. The cow kill for the year remains 7% down on the same period last year.
