Over-age penalty re-introduced

AN AUTUMN cattle trade without price cuts was too good to believe, and the past fortnight has proved that 2006 is no exception to the rule.

Downward pressure on prices is being maintained by beef processors this week, with the introduction at several factories of a 6 cents/kg (2p/lb) penalty for over-age cattle.

But the difference in 2006 from other years is that cattle farmers are showing more resistance to price reductions, and holding back the cattle which factories need to supply a strong beef market.

While weather deterioration last week provided some leverage for the factories to lean on as they cut prices, sellers were being strengthened by strong demand for cattle and apparent drying up of the supply of grass cattle. Suffice to say that very few cattle have been bought by the factories at officially quoted prices. But instead of responding directly with higher prices, factories have been offering perks on grading, transport, etc to get cattle without changing their official prices.

Cattle farmers have been correctly pointing out that beef price trends in the UK have steadied after slight downward adjustment in the past few weeks, and continue at the equivalent of up to 313 cents/kg (112p/lb) for R4L animals.

Here, most of the factories continued to quote 286 to 274 cents/kg (102p to 98p/lb) for R and O grade animals this week, with some adding another sting in the tail by introducing the 6 cents/kg (2p/lb) penalty for over 30 months animals.

Dunbia Exel at Kilbeggan decided to go a little harder by offering 280 to 279 cents/kg (100p-96p/lb) for R and O cattle — which is very unusual for that plant, and likely to affect their supply — while in the north west, 289 cents/kg (103p/lb) at least is available.

On the other hand, Kepak (Watergrasshill) are offering 292 to 286 cents/kg (104p to 102p/lb) for R and O grade heifers this week.

Resistance by cattle sellers to lower prices should being pressure on the factories within the next week, and put the new pricing to the test.

Quotes for cows are also lower this week, at a base of 241 to 229 cents/kg (86p to 82p/lb), but a top price of up to 286 cents/kg (102p/lb) was being paid for R grade cows up to last week — parity with the price being offered for prime cattle, which must be a first.