Beef Prices: Cattlemen counting the cost of dairy expansion
My local postman is about to discover what happens when things fall from a height. He is doing a charity parachute jump for the wheelchair association. A fair feat of bravery in any circumstances, but even more so in this case as this man has never actually been in a plane.
I was thinking that he could do worse than talk to beef farmers about their experiences about things falling - and when he has his feat achieved and landed, he might consider giving those cattlemen a lend of his parachute; because right now, something needs to be done to help break the fall in factory prices.
Bullocks are now back to a base of €4.05/kg, with heifers on €4.15/kg.
However, bullocks and heifers going into the system this week from last week are on €4.10-4.15/kg for bullocks with heifers on up to €4.25/kg.
The situation with bulls from 16 to 24 months is that the top of the price tree last week appears to have been €4.20/kg for Us, €4.10/kg for Rs, and Os floating from €3.90-4.00/kg, with word yesterday morning that those prices have held for at least the first few days of this week.
The under-16 month bull has, I'm told, become a very tricky proposition. Factory buyers appear to be under instruction not to buy them if they are to be priced on grid: in other words, buy them but only in the context of a flat price set-up.
While most farmers with cattle coming off of grass would be only too happy to take a flat price, when you've got upwards of €400 worth of feeding gone into a shed-based U-grade bull, you need those grid bonuses.
From the factories' point of view, with cattle numbers remaining high, due to additional cows and other dairy stock, why pay more than you have to?
It is to the price of those cull cows that I now turn. The simple message is that they too took a hit last week.
Quotes yesterday were back about 10c/kg with Rs on €3.60/kg, Os on €3.40/kg and P+s at €3.30/kg with other Ps on €3.20/kg.
I did have reports of cows being slaughtered this week and getting last week's prices, but that's because they were bought last week.
I reference a quote from my first mart report of this year in this week's mart report opposite, and it's worth repeating here.
Back in January, I said that the expansion in dairy numbers might cause problems in the beef sector: "This is a dairy issue that could yet cost cattlemen."
As of last week, that is exactly what has happened. I live in a very strong dairy area. I have spoken to dairymen short of both grass and fodder due to the year we've had to date, and all of them are taking action to reduce numbers.
Cows that could in theory be milked very successfully until the end of the year, but who might not be in calf or have some other issue, are either being slaughtered or under active consideration to be, all of which help build last week's kill to 33,851.
The question is how much damage will be done to the beef price by the time those cow numbers subside.
We may need a bigger parachute.
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