Beef trade commentary: What can be expected in the lead up to Christmas?
As we edge ever closer to the winter months – and with only seven full weeks to Christmas Day – the beef game is in no better condition, even after the agreements that were reached on September 15, 2019.
In fact, the very agreement that a Beef Market Taskforce meeting would take place to discuss matters further and provide more transparency and clarity – among other issues – has not even taken place.
Some farmers, who would normally finish cattle over the winter months, will argue that the beef game as we know it is up – and you couldn’t really blame them after the run of poor beef prices we’ve witnessed.
Teagasc figures indicate that for a winter steer finisher to break-even – and just to break-even which is not a sustainable model of production – he/she would need a beef price of €4.21/kg.Also Read: Can winter finishing deliver any margin for beef farmers in 2020?
If such a farmer was to target a modest margin of just €50/head, a beef price of €4.34/kg would be needed in the factory.
Also looming large is Brexit – or lack of Brexit if you prefer. As we all know, the implications of Brexit for Irish farmers – across many enterprises – are stark.
There is a dark cloud hanging over the Irish beef sector in particular, with approximately 10% of all beef cattle slaughtered in Ireland consumed domestically. The remaining 90% are exported – with the UK taking the lion’s share of this (approximately 50%).
With the date now pushed back to January 31, 2020, the lingering uncertainty is only set to continue.
Saying that, there seems to be some hope on the horizon – namely the Chinese market. Industry experts suggest we may be on the brink of something significant – particularly for pigmeat, beef and even poultry as a result of African swine fever (ASF) which has and continues to cause significant harm to China’s pig herd.
While the outlook in the short term is difficult, with huge scope to increase the tonnage of beef going into China, this would be a major boost for the struggling beef industry in Ireland.
This prospect has been helped by the approval of 14 further Irish beef plants, including two cold stores. 21 Irish beef plants now have a green light to export beef to the ever-growing Chinese market.Also Read: Approved beef plants given green light for trade by Chinese customs admin
Having said that, a reasonable increase in tonnage is not expected by the end of 2019, so the new year will hopefully tell a different story.
Meanwhile, returning to prices available at factory gates here in Ireland today, steers (as alluded to above) are at 345c/kg; heifers are hitting 350-355c/kg.
During the week ending October 27, some 37,893 head of cattle were slaughtered in Irish beef processing plants – 560 head behind the same week in 2018.
Cow prices remain steady and beef buyers are starting negotiations with farmers for cows at 260c/kg for P-grade animals. In addition, 280c/kg is on the table for O-grade animals. 300c/kg upwards is being quoted for R-grade cows.
Moving to bulls, factories appetites are varied – with prices of 345c/kg for R-grades. O-grade bulls are hovering around the 315-325c/kg mark. 350c/kg is being quoted for U-grading types. Under-16 month bulls trading on the grid are quoted at 340c/kg.
With the year-end looming ever closer, the commencement of the Christmas trade normally delivers more demand for beef. Last year, we saw Irish factories work at full capacity – breaking a weekly kill of 40,000 head several times in the lead up to Christmas.