Stephen Cadogan: Conditions ideal for store cattle market overheating
As high as prices are here, they are much more affordable for the Northern visitors, according to the Livestock and Meat Commission (LMC) for Northern Ireland.
Of course that is in pounds sterling terms, with the northern farmer getting nearly €1.40 for the pound.
That’s why more calves have gone north this year — even though when they eventually become beef, these “nomad cattle” will sell for a significantly lower than UK-origin cattle.
But Northern finishers reckon they can still leave a better profit margin than their very expensive local stores.
There’s a lesson there for southern farmers: beware of paying too much for stores.
The LMC is alerting Northern farmers to that danger — and a similar warning is merited down south, where many of the same supply, demand and price factors apply in the cattle market.
Tight supplies of cattle aged 6-24 months are part of the explanation for high store cattle prices in the north.
And in the south, December figures showed male cattle numbers of 12-24 months down 6%, and down 1.4% for 1-12 months.
The 12-24 months females are down 1.9%, but up 0.6% for 1-12 months.
On the demand side, the new phenomenon of “the active farmer” is reported widely in the North.
These are non-farming landowners, who wish to continue to claim entitlements by passing a CAP-reform active farmer test, so some of them are buying cattle or sheep.
No doubt it is happening in the south too, along with the annual rush to secure the 0.15 livestock units for seven consecutive months, for disadvantaged area payments.
North and south, fatteners are also prepared to pay a little extra for cattle, due to the abundance of cheap silage.
Add in the 8.5 to 10% price rise for beef cattle (in the south) compared to 12 months ago (and the steady rise farmgate beef prices between September and December in the north) — and the forecast that beef supplies will remain tight this year, and you have yet another ingredient for store cattle market overheating.
Of course that is good news for farmers producing calves, weanlings and stores, particularly the ever-struggling suckler sector. But those further up the cattle supply chain have to take care not to over-stretch themselves, in their search for raw material.
In the north, some may be prepared to take a loss on production in order to qualify as active farmers and secure their basic payment scheme and greening payments.
They also have the option of cheap euro calves south of the border. But there is much less leeway for the farmer down south looking to buy stores cheap enough to leave a beef profit.
