Heavy Spring losses are a disaster for finishers
The average factory price at the end of May was 20 cents/kg less than the same time last year, which resulted in a substantial drop in returns. They had planned on prices being better than 2006. The prices which were paid for store cattle last Autumn was indicative of the optimism which they held for a good Spring beef trade.
Some will dispute that such optimism as drove the Autumn store price in 2006 to such levels was never soundly founded — and they have a point — but no one anticipated the trend in the oppose direction. Beef prices falling throughout the month of May, to less than the Autumn price, was almost unheard of. It is the precarious nature of producing for a spot market price. Confidence in Spring finishing for beef has been badly shaken because finishers cannot carry losses in a sector where margins are always very tight. One of the major difficulties with beef production is the unpredictable market which always fuels anticipation of high returns, encouraging the punter to dig deep, and more often than not fails to deliver and is riddled with uncertainties.
