Beef trade: Factories slap another 5c/kg cut on prime cattle

Beef factories have most certainly taken back control of the market and continue to implement further price cuts. Processors have followed on with the same tactics that were employed during the same period in 2017.

For some processors, this is the third consecutive week of cuts and they are quick to quote base prices of 400c/kg for bullocks and 410c/kg for heifers.

Some procurement managers have mooted that this might not be the end of these severe cuts and farmers and specialised finishers could be looking at further reductions next week.

Despite a decrease in the total kill during the week ending June 24, factory buyers have noted that supplies are adequate; one procurement manager noted that they are “full for the week”.

The 5c/kg price cuts – implemented over the last three weeks – will have a serious impact on returns. This coupled with drought conditions will leave farmers with very little profit, if any at all.

With cattle supplies set to increase as the weeks progress, farmers need to shop around and bargain hard when their cattle are fit for slaughter.

During the week ending June 24, in-spec, R+3= heifers made a top price of 461.65c/kg, while the average price paid stood at 445.53c/kg.

Furthermore, a top price of 444.68c/kg was achieved for R+3= steers; the average price paid for these animals stood at 431.61c/kg.

Cow prices

Cow prices are still under pressure. This has led to a wide variation in quotes and prices – depending on the location and demand at individual processing plants.

Factory buyers are starting negotiations at 310c/kg for P-grade animals. Quotes for O-grade cows begin at 320c/kg and beef plants are offering from 340c/kg upwards for R-grade cows.

During the week ending June 24, O=3= cows made a top price of 368.69c/kg, while the average price paid stood at 353.62c/kg.

Cattle throughput

Figures from the Department of Agriculture show that the total kill for the week ending June 24 stood at 33,840 head – a decrease of 215 head on the previous week’s total.

This fall was driven by decreases across the young bull, aged bull and heifer categories. However, the number of bullocks and cows processed increased by 306 and 165 head respectively.

Week-on-week beef kill changes (week ending June 24):
  • Young bulls: 5,066 head (-130 head or -2.5%);
  • Bulls: 671 head (-49 head or -6.8%);
  • Steers: 11,086 head (+306 head or +2.8%);
  • Cows: 8,451 head (+165 head or +2%);
  • Heifers: 8,566 head (-507 head or -5.6%);
  • Total: 33,840 head (-215 head or -0.6%).

The British market

According to the Agriculture and Horticulture Development Board (AHDB), some 32,000 head of cattle were slaughtered in Britain during the week ending June 24. This number is reported to be on a par with the corresponding period during 2017.

The AHDB reported that – during the week ending June 24 – the average price paid for prime cattle stood at 370.13p/kg (418c/kg).

Looking at heifer returns, the overall price achieved by these animals was 421c/kg, while R4 heifers made the equivalent of 431c/kg.

Steer returns decreased and the overall price paid for bullocks stood at 367.6p/kg (418c/kg); steers falling into the R4 category traded at the equivalent of 432c/kg.

In addition, overall cow prices were reported to have increased during the week ending June 24. However, prices for cows falling into the O4 category decreased; the overall price achieved by cows was the equivalent of 300c/kg.