Beef market report: Price cuts take beef finishers by surprise

Beef prices came under pressure at the factories this week in some regions of the country, as processors reduced quotes for both steers and heifers.

There are no certainties in the beef trade — and a reduction in factory prices in early May is not what cattle farmers had expected, after beef cattle supplies fell in recent weeks.

Farmers were entitled to expect the supply trend would strengthen their bargaining power — but that has been turned on its head.

Instead, there are reductions of as much as 5 cent/kg in offers from the factory agents to cattle finishers this week, which has certainly come as a surprise to everyone.

The weekly cattle kill has dropped by 8-10%, and is hovering closer to the 30,000 head weekly benchmark, which was expected to boost prices.

Processors in the southern counties appear to be leading the field with price cuts, with their 410 cents/kg offer for steers being received by farmers as a major disappointment.

The base price for steers up the country is holding at 415 cents/kg generally.

Most of the stock being slaughtered this week will have been bought forward last week, at 415 cents/kg or a few cents more.

Therefore it will take a few days to determine how resistance by farmers to the price cuts pans out.

The pattern is similar for heifers.

Processors in the southern counties offer around 420 cents/kg, while the going rate up country is 435 cents/kg.

The price increase of recent weeks is holding in the cow trade, with O/P-grade cows quoted at 355-365 cents/kg, and up to 385 cents/kg being quoted for R-graders this week.

The intake at beef factories for last week was near 30,000 head, which is probably adequate for the processors to meet demand on exports markets, which have slowed down a little.

But further tightening in the supply could put pressure on processors, and there is a danger that any attempt to reduce prices will add to the resistance from farmers in the weeks ahead — if the price cuts are enforced.

The beef trade in Britain eased a little last week.

Prices for R4L-grade steers slipped back to average equivalent to 495 cent/kg (including VAT). However, demand was reported as steady for most cuts, with consumer interest for rumps slower.

In France there has been little change reported with on going promotions centred on roasts, fillets and sirloins.

In Italy, the trade was reported to have slowed on the back of sluggish demand with an increase in competition also reported to be having some impact on the trade.


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