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Saturday 17 November 2018

Beef prices harden on back of British demand

Competition for quality stock sees factories hike prices by up to €40 per head

However, winter finishers are reported to be scaling back operations by 20-25pc this year because of the poor outlook for returns from the sector.
However, winter finishers are reported to be scaling back operations by 20-25pc this year because of the poor outlook for returns from the sector.

Martin Coughlan and Declan O'Brien

Beef prices have hardened by €20-€40/hd over the last week on the back of stronger demand in the British market and increased factory bite for stock.

However, winter finishers are reported to be scaling back operations by 20-25pc this year because of the poor outlook for returns from the sector.

While slaughter plants were still trying to buy steers at 370c/kg this week, prices have increased by 5-10c/kg and most bullocks were bought at 375c/kg, with some hitting the 380c/kg mark.

The trade for heifers was also stronger, with most stock being bought in the 385-390c/kg price range.

The lift in prices has been attributed to strong competition between factories for quality cattle, and comes despite weekly cattle kills continuing to exceed 38,000hd, and industry talk of cold stores being full of beef across Europe.

Foyle Meats in Donegal are among those that have upped the ante on prices, with a raft of top-up payments that are adding 10-15c/kg to base quotes or around €40-50/hd to farmer returns.

The company is offering a base of 385c/kg for bullocks and 390c/kg for heifers, plus a 12c/kg quality assurance (QA) bonus which is paid on all grades of qualifying animals.

However, cattle must spend the last 90 days, rather than the usual 70 days, before slaughter on a quality assured farm to qualify for the QA bonus.

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In addition, the Donegal processor is paying a 10c/kg bonus payment on cattle that kill out between 320kg and 380kg, and a 30c/kg bonus for Aberdeen Angus carcasses of 300-380kg. The Angus cattle do not qualify for the 10c/kg 320-380kg weight bonus.

Foyle Meats' procurement officer Gabriel Lynch said the company is "deliberately targeting the better continental animal between 320-380kg" and is willing to pay better prices to acquire this stock.

"320-380kg is a market requirement. Carcase weights above this are not cost effective for us or the producer," Mr Lynch maintained.

Winter finishers

Meanwhile, animal nutritionist Gerry Giggins said that winter finishers have cut back by a fifth to a quarter on the numbers of cattle housed this winter because of the recent drop in prices and the poor outlook for the business.

Mr Giggins pointed out that lower factory prices this autumn were compounded by the €40-50/t hike in the cost of ration, which he estimated would add €60-70/hd to the cost of finishing young bulls or heavier animals.

Teagasc has forecast that a beef price of at least €4.50/kg will be required for finishers to break even this winter.

Edmund Graham of the ICSA said the beef factories appeared to be giving finishers very little encouragement to to fill sheds this winter.

The uncertainty around Brexit wasn't helping, he added.

In other beef sector news, Des Morrison of the ICMSA called on the Minister for Agriculture, Michael Creed, to take action on live exports.

"The minister has to take action on live exports and put some competition back into the beef trade," Mr Morrison said. "The reason the factories don't have to commit to deals with winter finishers is because there is no competition for stock."

Mr Morrison claimed that some interest in taking cattle has been expressed by Libyan buyers.

IFA president Joe Healy said increased demand for the Christmas trade was about to kick in and he said factories were trying to pin down numbers. He urged farmers to insist on a strong price increase as the market could pay it.

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