Factories: Farmers can hardly believe their luck at beef price turnaround
As I contacted my various sources in the cattle business yesterday morning to ask about the state of factory prices, I noticed a hushed confidence.
The tone was one of "don't tell anyone and maybe the factories won't notice the price". Of course they notice - they set the price - but those taking it are almost at a stage where they can't believe it, given that winter finishing prices were so poor by comparison to what is now being achieved.
Yesterday I was quoted €4.15-4.20/kg for bullocks, with heifers on €4.25-4.30/kg, with Angus Woods of IFA reporting that €4.35/kg for heifers has also been paid.
If you are only an intermittent seller or a man with single-digit numbers you may be quoted below these prices, but at the mention that you may go somewhere else, another 5-10c/kg can be found. The message is all stock, no matter how small the number is, are valuable to the factories at present.
Bulls' prices have also moved onto a higher plain this week, with under 16-month stock now on a base of €4.15/kg, while the under 24-month bull sees U's on €4.20/kg, with R's on €4.15/kg, while O grades vary depending on the deal done from €3.90-4.05/kg.
The cow trade is expected to come under pressure this week as factories attempt to pull the handbrake on their price and if possible set it into reverse. As of yesterday morning quotes for cows were generally back by 10c/kg with the stable O and P grades being quoted from €3.50-3.40/kg and €3.40-3.30/kg respectively.
That said I suspect no factory will have killed cows at those lower prices yet this week as they will still be working off of deals done at last week's prices. It will be interesting to see if the traditional ploy by the factories of dropping the cow price around the first of June in the hope of flushing out some extra early numbers works as the week goes on.
In relation to Dawn Meats taking a majority stake in Dunbia - providing it gets by the competition authority - all the farm organisations appear to be of the opinion it's a bad thing on the assumed basis that the takeover will reduce farm gate competition.
From where I sit it is another step in the evolution of the Irish red meat business, the development of scale. That development has been on-going with some of the most important production decisions behind Dawn and Larry Goodman's ABP recent expansions going almost unnoticed.
I speak of the expansion and acceptance among beef farmers of contract rearing and fattening for specific plants. Couple this with the factories' own feedlot development and you begin to see the outline of the blueprint that the major processing players in the industry have been working to over the last ten or so years: scale, leading to consistency of supply and a marketing strategy underpinned by our green image. These are three things that big international supermarket retailers can identify with.
On the international beef trade, beef prices in the main producing continents are very strong, with US and Canadian prices at €4.45/4.50/kg. "Australian prices are also at historic high levels at €3.52/kg and some of the South American powerhouses are also very strong with Uruguay at €3.41/kg and Argentina at €3.25/kg, all exclusive of vat," said IFA man Angus Woods.
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