Hope of beef market floor dashed by fresh factory cuts

Optimism among suppliers that the market was beginning to bottom out was dashed as factory prices were cut by a further 10c/kg across all major categories of stock.

Hopes that the week-after-week slide in beef prices was beginning to ease failed to materialise, with factory quotes showing a further reduction this week.

Optimism among suppliers that the market was beginning to bottom out was dashed as factory prices were cut by a further 10c/kg across all major categories of stock. Many finishers are now counting the extent of the growing losses.

Across most of the larger processing plants, the base quote for steers has been reduced to 610c/kg this week, with heifers on a base of 620c/kg. R-grade cows are making 580-585c/kg, while R-grade young bulls are quoted at 620-630c/kg.

There are reports of some suppliers negotiating 5-10c/kg above base for both steers and heifers, bridging the gap between last week's prices and current rates.

Meanwhile, analysis of Department of Agriculture weekly price data confirms an ongoing reduction in returns, although not as severe as quoted prices would suggest.

Department figures show the average base price for steers across all export factories has dropped by 58c/kg since mid-January, while the average for heifers has declined by 61c/kg over the same period.

These figures include all bonuses paid, including QA and breed bonuses where applicable, as well as contract deals between processors and some larger suppliers.

As a result, they can mask the actual prices received by many producers, particularly smaller suppliers and those finishing a high proportion of dairy-bred cattle.

However, the analysis does show an acceleration in the rate of decline, which is a worrying trend for finishers.

The national average base price for steers declined by 13c/kg from early January to the beginning of March, before falling by a further 32c/kg during March and April and an additional 13c/kg during May.

The pattern was similar for heifers, with declines of 12c/kg, 37c/kg and 11c/kg over the same respective periods.

Quoted prices for both steers and heifers declined by 10c/kg during May. However, contract deals with some suppliers, typically larger finishers, may be masking the scale of the quoted reductions filtering through to many producers.

There was a slight decline in throughput last week, with the kill falling to 30,032 head. This included 11,932 steers, 9,055 heifers, 5,930 cows and 2,430 young bulls.