Supply shrinks due to retention for last of SBP
A base price of 286 cents/kg (102p/lb) became the norm at most factories on Monday, and while some top-up on quoted prices was paid on Monday, processors put up greater resistance to paying higher prices as the week progressed. In the deep south, cattle supplies were stronger, and sufficient cattle were being purchased by some factories off a base closer to 280 cents/kg (100p/lb), with the IMA grid scale operating above or below the R4L grade.
Supply became the price determining factor, with plants operating a price base of 282 cents/kg (101p/lb) in the east, while the standard was more likely 286 cents/kg (102p/lb) further north.
Exel at Kilbeggan and its sister plant, Newgrange Meats at Navan quoted 286 to 280 cents/kg (102 to 100p/lb) for R and O grade animals, provided that they were not seriously over-fat, while Donegal Meats operated off a base of 283 cents/kg (101p/lb), pricing other grades as per the grid scale.
It remains to be seen if they paid stronger prices to get cattle, as they had been doing in recent weeks, with factory averages for R4L of up to 104p/lb in the pay sheet returns compiled by the Department of Agriculture.
Tighter cattle supply to factories over the past 10 days may be due to farmers awaiting completion of the SBP retention period for end of December applications, and to some farmers holding cattle in expectation of higher prices. But holding cattle now could lead to stronger supplies in March, undermining March prices, which could fall, if cattle supply exceeds beef requirements.
On the other hand, it will be very difficult to bring prices back by any worthwhile amount, but tighter application of the grid scale could be used to cut prices for poorer grading animals. The prices on offer for the cull cows remain very strong with quotes of up to 235 cents/kg (84p/lb) and up to 252 cents/kg (90p/lb) being paid for good quality cows.
