Rising kill numbers put the squeeze on beef prices
At the start of June, general quotes for bullocks ran from €4.20/kg to €4.30/kg, while heifers were trading at €4.25-4.35/kg.
However by the end of last week, those with bullocks for slaughter early this week were being quoted in the €4.10-4.15/kg price range, while heifers were back to a top of €4.25/kg, but €4.20/kg in places.
The incentive for this price pull appears to be the sudden jump from 32,000 to 34,000 in kill numbers last week. There is no doubt that the factories are intent on getting back full control of prices and from the farmer's point of view, it's never a good thing when the market starts to go in the wrong direction.
Leaving aside last week's unexpected increase in numbers, let's look at how the summer trade has developed thus far. Firstly, I'm not hearing that the market for beef has gone soft; it may have changed with the recent good weather due to less roasts being cooked, but demand for manufacturing beef is still very strong.
The IFA report that R3 grade bullocks in the UK are making the equivalent of €4.51/kg. Secondly, factories have been killing around 32,000 cattle per week since the start of May with no indication that such a number has been a problem. Thirdly, prices prior to last week had actually strengthened week on week.
Cow prices, which are the great barometer of the trade, do seem to be remaining strong. The quotes I was given yesterday morning were R grades still around €3.60-3.70/kg. O grades are on €3.50/kg, and P+s are making €3.35-3.40/kg. However, I was told that some plants were looking at dropping lesser P types further down the scale. On the bull side, under 24-month U grades are being quoted from €4.15-4.25/kg, with Rs on €4.10-4.15/kg. Meanwhile, O grades are generally getting into €4.00-4.05/kg but with some plants quoting as low as €3.90/kg yesterday morning.
So what's actually going on? Is this the start of the annual slippery slide?