No change yet on beef prices at factories but market could turn in mid-year

In general, it is more of the same on beef prices at factories this week.

Quoted prices show very little change, and the supply of cattle to the processors is following the usual pattern of slowly rebuilding after the Christmas wind-down.

This year, all indicators point towards an increase of 70,000-90,000 head in the supply of finished cattle on offer to beef processors, with the final outcome within that range depending on the age at which they are finished.

Beef farmers know from experience that stronger supplies of cattle to the factories usually means pressure on prices.

Additionally, Bord Bia analysts say that the returns from export markets may come under more pressure in 2016, which isn’t encouraging news for any Irish beef finisher.

The share of Irish exports which went to the UK market increased in 2015 to 54%, in a trade benefiting from the strength of sterling.

Looking forward, the Bord Bia view is that the prices are coming under more pressure in the UK, having already slipped as much as 30p/kg in 2015.

Further slippage, and any weakening in sterling, will impact on returns to Irish exporters in 2016.

Cattle farmers know that trend would very quickly be reflected in their cheques from the processors.

No change yet on beef prices at factories but market could turn in mid-year

European beef markets are also looking more sluggish, with the returns less predictable, going forward.

It all adds up to a not very rosy picture for 2016.

But major changes are unlikely in the first quarter, with supply and demand likely to remain relatively well balanced all the way to mid-year, an important factor to keep prices stable.

Then, and particularly into the autumn, when supplies will peak, prospects for the trade are not so great.

Back to the present, the quoted base price for steers this week is 390 cents/kg at most of the plants, for under-30 months animals.

Processors are meeting resistance from farmers to any further price cuts, but processors are equally rigid in opposition to paying a cent more, unless it is absolutely necessary to get the cattle that they require.

There is slightly more flexibility for those selling heifers.

The quoted base price range is 10-15 cents/kg over the steer prices, at 400-405 cents/kg.

Most processors are trying to get heifers at the lower end of the scale, but a few farmers have reported slightly above 405 cents/kg being secured for top quality heifers.

Cow prices are 315-320 cents/kg for O/P-grade, and up to 340 cents/kg for Rs.

The cattle supply increased to around 31,800 last week with steers accounting for 10,500, with 9,500 heifers and 6,000 young bulls.


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