Farm Ireland
Independent.ie

Friday 19 January 2018

'Stubborn' factories refusing to buy at €4/kg

Joe Healy

"We still can't see any sign of dessert despite that much heralded 'Last Supper' Holy Thursday meeting" a beef finisher said to me yesterday morning.

He was after being quoted 395c/kg on the grid for his heifers and the factory in question was not going to give him €4/kg.

He was trying to share around his stock, but felt he would have to return to the plant that gave him the even money last week.

In any case it does seem to be a tad tougher this week to nail down the €4/kg even though it is being secured in places but more often than not the processor is trying its best to buy at the 395c/kg.

It is a similar story with the steers, where finishers are finding the factories stubbornly sticking to the 390c/kg despite a few reports of a base of 395c/kg being agreed. In the main, the steers are being quoted at 390c/kg. It's interesting, though, that it appeared easier to secure a 395c/kg base in the south yesterday. Out of spec stock were being quoted at 370-380c/kg.

I spoke to another farmer who sold his overage, mainly U grade steers this time last year at a base of 474c/kg. He would be a long way short of this for similar type stock at the moment. If, as you would expect, these types kill out at a minimum of 450kg, are we looking at a similar figure in euros in loss per animal? It doesn't bear thinking about.

IFA livestock chair, Henry Burns said that the trade is relatively steady with finishers negotiating base prices of up to €4/kg for heifers and €3.95/kg for bullocks.

The tops of the bulls are varying between 360-370c/kg while the R grades are at 350-360c/kg. The O grade bulls are making from 300-330c/kg. Looking at the table (right) you cant help but notice there is only a very slight difference between the prime young bull prices and the old cull cow prices.

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The U grade cows are identical to the bulls of the same grade at 360-370c/kg.

Steady

The Rs range from 340-350c/kg while the Os again are only the slightest bit different to the O grade bulls at 300-320c/kg. The P cows are generally making from 290-300c/kg.

An Bord Bia described the beef trade as steady over the past week with prices on a par with previous weeks on the back of continued strong supply. Trade was mixed across our key export markets.

Prices quoted by export meat plants remained relatively unchanged but showed a slight uplift in some categories. Steers were averaging at a base price of €3.90-4.00/kg on the Quality Payment System. Heifers continued to trade at a base price of between €3.95-4.00/kg. These prices exclude the €0.12/kg bonus which is payable on in-spec QA animals. Prices paid for O grade cull cows were generally ranging from €2.95-3.15/kg.

Department of Agriculture estimate last week's kill figure at 32,069hd, some 4,800 hd up on last year. Cumulative supplies for the year to-date are running at around 67,000 head or almost 13pc above the corresponding period last year. Cumulative supply of heifers are up around 17pc and young bulls up by over 10pc respectively.

In Britain, reported cattle prices from the AHDB have eased with GB R4L grade steers averaging at Stg354.8 pence/kg dw (equivalent to 455 c/kg incl VAT dw). Trade has been quite slow with demand remaining sluggish.

In France, the trade remains similar to previous weeks and prices remaining stable. Beef promotions in a number of major retailers are expected to help the trade.

Forecasts

Meanwhile, a new report released by Rabobank forecasts Chinese beef imports to grow by 15pc to 20pc annually over the next five years. This increase is expected to make up a growing shortfall in domestic production, which Rabobank suggests has arisen from a number of factors, including a relative lack of government support for the beef sector.

This growing shortage in domestic beef, coupled with growing demand from Chinese consumers as urban incomes rise, has led to massive growth in imports. In 2013, imported beef volumes reached 297,000 tonnes, representing growth of 3.79 times the annual volume for 2012.

Indo Farming