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Still no good news on prices as factories turn the screw



ICSA President Edmond Phelan

ICSA President Edmond Phelan


There is still no good news on the factory price front.

Quotes for bullocks and heifers were back Monday morning by 5c/kg, at €3.60-3.65 and €3.70-3.75/kg respectively.

How many cattle will be bought at these lower prices remains to be seen.

Currently deals are being done for bullocks and heifers 5c/kg above these quotes, but with last week's kill at 35,276 the factories continue to have the whip hand.

The general acceptance among many in the trade, both factory agents and farmers, is that we are headed for a base of €3.50/kg for bullocks with heifers on €3.60/kg.

"If that's where they want the price, the sooner we get there the better," said one agent. With supplies seeming to be endless and the processing sector due to go into holiday mode in August, the outlook is not good.

The rationale from the factories appears to be that having fleeced the winter finisher they now wish to exert pressure on the mart trade through factory pricing, hoping to see mart prices reduced to levels that might entice those winter men to commit again.

That agent I quote reflects a lot of current feeling. It's the uncertainty in a falling market that the market hates. At least if you arrive at where you're going there is a feeling of stability.

However, stability is in short supply unless you have cows to sell.

Cow prices appear to be holding quite well among all the turbulence.

This week I had reports that the base for under-16-month stock has slipped to €3.50-3.55/kg.

With bulls up to 24 months U grades are operating from €3.65-3.70/kg, with Rs reported as being on €3.60/kg.

In last week's Farming Independent beef finisher Robin Talbot argued that there needs to be some element of certainty built into the price farmers take at the factory gate.

Before starting the expensive business of finishing animals, he suggested that factories offer a minimum base price, not a contract price.

He mentioned examples from the US, where everything from input costs to the finished price were locked in once you were 100-120 days away from slaughter.

There is no doubt scale would matter, but if those of us who are involved in fattening don't start thinking and co-operating we are in deep trouble, because you can't keep a business alive by constantly losing money.

The ICSA's new president Edmond Phelan appears to be recommending further price cuts in any review of the grid.

Why? The ICMSA has produced a body of work on the grid over the last number of years which states, unequivocally that up to €12m per year is being trousered by the factories from existing grade differentials.

Better to try to recover some of that money and pass it on up the line than recommending further cuts.

Indo Farming