Further fall in Sterling not helping the beef trade but prices are holding steady

A further fall in the value of Sterling is adding further pressure to the Irish beef trade.

Last week, Sterling moved lower as the Bank of England cut interest rates in an attempt to counteract a looming recession in the UK.

As a result, Sterling fell to a three-week low against the euro and the latest figures from the European Central Bank show that €1 bought 84.81p Sterling on August 5.

A weaker value of Sterling is having an impact on the attractiveness of Irish beef and lamb to UK processors.

A number of procurement managers told Agriland that last week’s fall in Sterling is putting increased pressure on the trade.

The UK is the largest buyer of Irish beef and last year it accounted for over 50% of all Irish beef exports valued at more that €1 billion.

However, despite the weaker Sterling, Irish factory prices remain largely unchanged from last week.

Procurement managers are currently offering a base price of 380c/kg for in-spec steers, while heifers are hoovering around the 390c/kg mark.

Like the prime cattle trade, there has been little changes in the cull cow trade.

Procurement managers are currently offering 300c/kg for R grade cull cows, while farmers selling O and R grade cows can expected to be offered 290c/kg and 280c/kg respectively.

Base beef prices:
  • Steers: 380c/kg
  • Heifers: 390c/kg
  • R grade cows: 300c/kg
  • O grade cows: 290c/kg
  • P grade cows: 280c/kg

Finished cattle supplies on the increase

The number of finished cattle slaughtered in Department of Agriculture approved beef plants is showing some signs of increasing.

According to the Department’s beef kill database, there was a 2.5% or 741 head increase in cattle slaughterings in Irish plants during the week ending July 31 compared to the week before.

All of the major categories of cattle posted some increase in the weekly kill volume, with cow and heifer slaughterings showing the biggest jump, up by 350 head and 309 head respectively.

Young bull and aged bull throughput also increased on the week before, while official figures show there was only a 0.2% (29 head) increase in steer throughput.

Week-on-week beef kill changes:
  • Young bull: +175 head (+6.3%)
  • Bull: +100 head (+17.5%)
  • Steer: +29 head (+0.2%)
  • Cow: +350 head (+4.7%)
  • Heifer: +309 head (+4.5%)
  • Total: +741 head (+2.5%)

Cattle throughput up in 2016

Figures from the Department also show that there has been just over 26,000 extra cattle slaughtered so far this year compared to the same time in 2015.

The majority of the increase comes from a jump in young bull throughput, which is up by 29% or 29,463 head, while an additional 6,525 cows have been slaughtered so far this year.

However, despite the overall increase in throughput so far this year, both steer and aged bull throughput have declined on 2015 levels.

Official figures show that steer throughput has declined by 1.8%, while the aged bull kill is back by 4,136 head or 18.9%.

Year-on-year beef kill changes:
  • Young bull: +29,463 head (+29%)
  • Bull: -4,136 head (-18.9%)
  • Steer: -6,014 head (-1.8%)
  • Cow: +6,525 head (+3.5%)
  • Heifer: -70 head (0%)
  • Total: +26,026 head (+2.9%)

Main markets for Irish beef

According to Bord Bia, the British beef trade continues to be underpinned by tighter supplies along with steady demand.

Last week, the AHDB showed that British R4L steers averaged 349.4p/kg (417c/kg), while similar type heifers made 347.2p/kg (412c/kg).

Bord Bia also says that it remains difficult to get imported beef onto retailer’s shelves in France as retail promotions continue to focus on domestically produced mince and burgers.

Further south, the Italian market continues to be underpinned by lower consumption rates, it says, while lower cattle supplies and higher demand have resulted in some uplift in the German beef trade.