Processors ease slightly on the purse strings to concede up to 5 cents/kg more
The stability of the price, or any improvement, at this time of the year is highly dependent on the balance of supply of cattle and demand at the factories to supply the markets.
The balance of negotiating power between the producers and the processors of beef has moved a shade to edge slightly in favour of the producers this week.
To ensure the smooth continuity of intake at their factories, the processors have eased slightly on the purse strings to concede up to 5 cents/kg more on the prices being paid for both steers and heifers.
Any upward movement in prices is always welcome, particularly at this season of the year approaching the most critical months for peak supplies of cattle to the factories and the opportunity for processors to tighten on prices being paid.
For the most part this week, the factories are paying a base of 500 cents/kg for steers and 505 cents/kg for heifers. Some suppliers with large numbers on offer and regular suppliers are negotiating for a few cents/kg more.
The stability of the price, or any improvement, at this time of the year is highly dependent on the balance of supply of cattle and demand at the factories to supply the markets.
Positively, the markets are continuing strong, with good demand for beef supplies, while all of the indications are the supply of finished cattle should remain tight to the end of the year.
It has been a very difficult year for finishing cattle off grass and carcase weights are lower than usual as a result. Producers must decide between selling at the lower carcase weights or holding back to finish later in the year at higher weights.
This amounts to a balancing decision for producers between the additional cost of retaining and feeding in the hope of being recompensed with the beef price or taking current prices for lighter animals.
As some at least will undoubtedly take the gamble to hold back, it could put added pressure on the processors to maintain the required level of intake, which should help sustain the prices on offer.
The trade for cows is holding up well. Despite the higher supply year to date, demand at the factories remains very strong to supply the most volume demanding and currently lucrative category of the market.
The R grade cows continue to be quoted 470-475 cents/kg, with the prices having strengthened again over recent weeks.
Intake at the factories last week confirms the extra pressure that is mounting on the processors. Supply was 2,700 head lower than the corresponding week in 2023. That is over 8% of the intake for the week, which was 32,065 head.
The supply included 14,783 steers, 8,653 heifers, 6,636 cows and 1,257 young bulls, with the lower intake being reflected across each of the main categories for the week.
