Beef market report: Strength of sterling helps boost market for beef

The continuing balance between supply and demand for beef animals at factories has ensured that prices stay firm, aided by a favourable currency exchange rate, with sterling rising to its strongest level against the euro since 2007.

Against the usual pattern for July, beef prices at factories have gained as much as 5 cents/kg this week across the range for both steers and heifers, while cull cow prices are showing improvements of 5-10 cents/kg.

Intake at the plants last week remained tight, at just over 29,000 head, similar to the previous week, which maintains pressure on processors to source sufficient cattle to meet orders.

More of the steers are being purchased at a base of 430 cents/kg this week, with up to 435 cents/kg paid where supplies are tighter and farmers negotiate harder on price.

However, processors have tightened the premium for heifers to 5 cents/kg over the steer price.

Heifers are generally being quoted for at 435 cents/kg, with up to 440 cent/kg being paid fairly widely.

The strengthening price is helping to slow any increase in the cattle supply to factories, with farmers holding on for weight gains before deciding to sell stock off grass.

The strong prices being paid for forward animals at the marts also deter sellers, because of the high cost of replacing sold animals, at prices described by some farming leaders as “madness”.

The very strong trade for forward store animals at the marts is being driven by the current beef price and the supply of grass on most farms.

However, there are serious concerns about the profit outcome for many purchasers of these expensive animals, if there is any sizeable downward adjustment of beef prices by processors in the autumn, when the supply inevitably increases.

Cow prices have also improved, to a 370-385 cents/kg range for O/P-grade cows, and up to 400 cents/kg offered for better quality R-grade cows.

The beef trade in Britain is reported to be averaging equivalent to 551 cent/kg (including VAT).

Market requirement is continuing strong, with trade for most cuts going well, and the best demand for steak cuts.

In France, a steady trade is reported, with promotions centred on ribs and steak cuts. In Italy, slow demand and low consumption continue, and a showdown in exports to Greece has particularly hit the trade for forequarter cuts.