Penalties for heavier carcases now an issue

The overhang of finished cattle left in the aftermath of factory gate protests by farmers continues to affect processing, and prices.

The disruption of slaughtering led to a build-up of around 100,000 cattle on farms which normally, and the pressure to get these cattle killed continues to be an issue for finishers.

Processors have gradually returned to more normal operations, with the intake continuing to increase.

The kill last week came to around 37,700 head, and it is likely to increase further this week, supply picking up as poor ground conditions on farms in most areas of the country force farmers to offload stock or to house them.

With more stock available to the processors than is required by the markets, there is no leverage for finishers to negotiate on prices.

Meanwhile, the base prices quoted for most categories of cattle continue at their year-to-date low levels.

The base price offered for steers remains at 345 cents/kg.

It is very difficult to get a top-up on that this week, even for hard sellers, because the processors are in such a strong position on supply.

Heifer prices are on a base of 355 cents/kg, and similar to the steers, negotiating with the processors for more than that is a difficult task.

As for price bonuses and penalties, cattle going over age has become a problem for many finishers, due to the protest disruption.

Improved bonus payments for in-spec cattle are helping, where the other qualifying criteria are in order.

The in-spec bonus for under 30 months has been increased from 12 cents/kg to 20 cents/kg, and 30-36 month in-spec stock qualify for a new 8 cents/kg bonus.

But penalties for carcases going over preferred weights has now become an issue.

The cut-off point for carcase weight is 420 kgs, and a graded penalty system of up to 30 cents/kg for above that is now being applied by some of the processors.

Prices for young bulls are around 340 cents/kg for R-grade, within the preferred weight range, while Os are trading around 320 cents/kg.

There is very little change in cow prices from last week.

The better quality heavy cows are in demand at the factories, but the plainer type are less favoured.

Up to320 cents/kg is being paid for the better R-grade cows.

The O-graders are making 275-285 cents/kg, and prices for Ps are running around 265-275 cents/kg.