Beef suppliers hope the slide in prices may be bottoming out

Supplies for the factories are drying up and finishers are in a much stronger position.

While some of the processors continue to exert pressure on producer returns, there is optimism that the weekly slide in the beef prices at the factories is moving closer to bottoming out.

Although market demand has weakened for beef the pressure to get supplies is understood to be a key influencer behind factories reducing the number of slaughtering days each week.

However, the quoted base prices have been reduced by up to 5 cents/kg for both steers and heifers this week at some of the factories, but the word is that suppliers are only treating it as an 'opening' offer and negotiating hard before selling.

"Supplies for the factories are drying up and finishers are in a much stronger position to hold out against any further cuts and they (factories) are beginning to realise that the balance of control is sifting towards the producers" according to an informed source this week.

"It doesn't look that there will be a flush of early finished cattle coming off the grass over the weeks ahead because the forward stores were costing so much that a lot of the regular early grass finishers didn't go that route this year" he added.

Cattle numbers going through the live sales at the marts has also eased and all of the indicators are that overall supplies of finished cattle will continue to tighten over the second half of this year.

"Nothing is ever certain in the livestock/beef trade, but all of the signs are now pointing in the direction of the balance of control being well positioned on the side of producers up to the end of the year" the source said.

The base for steers is being quoted back to 710 cents/kg this week, but the belief is that most of the supply is moving on a base of 720 cents/kg with the factories in a struggle between wanting to get the cattle and keeping a lid on the cost.

Some of the factories have reduced base quotes for heifers to 715 cents/kg but generally having to pay 710-715 cents/kg and up to 720 cents/kg to source sufficient supply.

The R grade young bulls are in general running at 730-740 cents/kg, while demand is reported to be very strong for cows to make up for the shortfall in steers and heifer supply.

While the general run for R grade cows is 680-690 cents/kg those with larger number of well-fleshed R grade cows are commanding 700 cents/kg.

The factory intake for last week continued on par with recent weeks at 29,014 head, the eight consecutive week for supply below 30,000 head.

Last week the kill included 10,409 steers, 8,570 heifers, 6,577 cows and 2,937 young bulls.