Beef processing rationalisation may be ‘inevitable’ as supplies continue to decline

Supply will remain the critical factor to determine the price forward over the coming months, with the processors appearing to have adjusted their requirement to around 30,000 head per week. File picture

The continuing drought is aiding the processors to maintain downward pressure on the beef prices, as scarcity of grass is driving the supply to the plants.

While some of the factories are holding their quoted prices for steers and heifers this week unchanged, others have reduced their quotes by a further 10c/kg for both categories, in a continuation of the pressure on prices for the third consecutive week.

Steers are being quoted at 630-640c/kg, with suppliers reporting that it is more difficult to get the higher price from the larger plants this week.

Heifers are being quoted in a similar pattern, with the prices ranging 640-650c/kg and smaller factories reported to be more willing to pay at the higher rate.

The cow prices are holding steady this week in general, with the heavier, well-fleshed cows in good demand. The R grade cows are making 630-635c/kg in general. The supply of young bulls is currently low, with the R grade trading at a slight premium to the same grade steer on 650c/kg generally this week.

There was a good flow of almost 31,000 head of supply to the factories last week, although the operating week was cut by a day following the August bank holiday on Monday. 

The ongoing drought conditions, leading to a severe shortage of grass on many farms, are forcing finishers to sell stock in greater numbers.

The trend of the trade is becoming clearer, with the main players targeting getting prices back to early July levels sooner rather than later and fully recovering the ground conceded when the sharp drop in supply put the processors under real pressure to get cattle.

Supply will remain the critical factor to determine the price forward over the coming months, with the processors appearing to have adjusted their requirement to around 30,000 head per week.

There are widespread rumours circulating that overcapacity for the declining supply of finished cattle is becoming a matter of serious concern for the overall beef processing industry going forward.

There is a strong belief that some form of rationalisation is necessary and may become inevitable for the future viability of beef processing in this country.

The supply last week came to 30,914 head, which included 13,205 steers, 8,757 heifers, 6,607 cows and 1,635 young bulls.

Total intake at the factories year to date is now 64,780 head lower than for the same period last year. Heifers are down by 26,225, cows are back by 20,789 head and steers are back by 15,729 head.