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High prices threaten beef sales

Fears are mounting that the record high prices that beef cattle are currently commanding is beginning to dampen consumer demand.

Despite the weekly cattle kill dropping to one of its lowest levels in years, processors have eased prices over the past fortnight, according to official figures from the Department of Agriculture.

The average base price for steers for the week ending March 24 dropped to 407c/kg compared to 409c/kg for the previous week.

This was despite the fact that intake at the plants was over 8,000 head back on the same week last year.

Bull finishers are also hurting following a decision by the factories to slash the premium being paid on U grade young bulls and reduce intakes by more than 30pc.

With more than double the number of bulls making U grade compared to steers, and higher carcass weights, the reduction in U grade premium is set to cost farmers €150,000 per month. Some finishers are ending up on waiting lists to get their bulls into factories.

The development highlights some of the weaknesses of the bull beef system that has been enthusiastically embraced by farmers over the last number of years. The bull kill has been on par with the steer kill at times over the last number of months.

But mature bulls have a narrower window for slaughter due to their size and the risk of bull taint on the meat.

Both Bord Bia and processors claim the volumes of bulls being supplied by farmers is creating marketing difficulties.

The premium being paid on U grade young bulls has been reduced by almost 60pc within the past month and now represents half of the average premium being paid for similar grade steers under the QPS at the factories.

The average premium for U grade young bulls (over R grade) has been reduced from over 10c/kg in February to under 5c/kg for the week ending March 24.

The equivalent premium for U grade steers over base for the same week was close to 10c/kg.

These prices are verified by the Department of Agriculture and include the quality assurance bonus of 6c/kg as applicable for steers under the QPS.

The same figures show that the weekly bull kill in January was 6,332. However, this figure dropped to 4,155 for the week ending March 24.

Dawn Meat's Paul Nolan said that he was not surprised by the developments.

"I've been saying for months that these prices are being driven by the scarcity of supply rather than the amount of demand," he said.

"Our non-core buyers say that they can buy cattle cheaper on the Continent.

"They are going elsewhere and we are focusing on just keeping supply going to our key customers.

"We're taking a hit but limiting the damage as much as possible."

However, prices reported from the beef trade this week suggest that the trade has held steady.

Steer base prices of 410c/kg are being achieved, while U grade bulls are making up to 420c/kg, according to the IFA's livestock chairman, Henry Burns.

Bord Bia also reported a firm trade as demand shows some signs of improvement in the run up to Easter.

The best trade reported was for roast beef joints as more consumers continue to switch to hindquarter cuts in response to excellent weather conditions being enjoyed across northern Europe at present.

Indo Farming