Beef price may have bottomed ahead of peak kill

As beef prices steadied at factories for this week, there was cautious optimism among farmers that the downward trend of recent weeks may have bottomed out in time for the busiest season of the year.

Supporting their belief is the omen of stable prices are on the back of a year-high kill at the processing plants last week, and the knowledge that overall supplies of finished cattle are the lowest for a decade.

Some processors continue to quote base prices for steers back to 375 cent/kg (134p/lb), but very few farmers are selling stock for less than 380 cent/kg, and some are securing deals for up to 385 cent/kg, while rare deals are being reported for the best cattle at 395 cent/kg.

As a result, farmers are encouraged to maintain a hard sell policy and agree upward-only prices.

Base prices for heifers are being maintained at 10-15 cent/kg ahead of steer prices, with 400 cent/kg being negotiated for choice lots.

The usual seasonal price pattern of regional difference is very evident again. Prices generally are lowest across the south and strongest in the north west where Donegal Meats, in particular, continues to deliver strong prices.

The kill last week topped 32,490 head, the highest year-to-date weekly kill, but still about 5,000 head lower than the same week in 2011, which was the busiest week of 2011.

For 2012, it is unlikely that the annual peak will exceed last week’s intake by very much.

It is proving to be a year without winners in the beef sector. Farmer profit margins are well down on 2011 for those who had to purchase stores, and processors have failed to get prices back to their target level.

Meanwhile, cow prices are also stable at the factories this week. Base prices for O/P grade cows are quoted at 300 to 340 cent/kg (107p-121p/lb). The heavier quality cows are being quoted at up to 345 cent/kg, and some sellers are negotiating a bit more.

In the UK, the beef trade is unchanged, with tight supplies continuing to match demand levels. Cattle prices have firmed, with R4L grade steers averaging equivalent to 466 cent/kg (166p/lb), including VAT.

On the Continent, trade across most of the key markets is firm, with prices reflecting this pattern. Demand is continuing to shift from hindquarter to forequarter cuts in response to cooler weather. On some markets, demand remains strong for fifth quarter cuts.