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Pressure continues to build for significant upward movement in Irish beef prices.
Meat Industry Ireland’s acknowledgement this week that market performance has improved, citing “green shoots” appearing, is of little use to finishers producing cattle and facing returns below the cost of production. The only action that matters to producers now is significant upward movement in prices.
Factory appetite has increased and this is reflected in last week’s kill rising to 40,214 head, an increase of 663 head on the previous week and the highest weekly throughput in 2019. Increased demand is also seen in many plants dropping their reluctance to accept significant numbers of cattle aged over 30 months.
There are signs of movement on price but only when factories are pushed to the pin of their collar. Steers continue to trade in the main on a base of €3.45/kg, with select deals completed 5c/kg higher. There seems to be more scope to negotiate on heifers. Many plants that had reduced the heifer base price to €3.45/kg have lifted 5c/kg to a base of €3.50/kg. This is not happening across the board, however, so sellers need to use their negotiating power.
At the higher end of the market, a base of €3.55/kg is being paid, with Liffey Meats said to be joined on this base by Foyle Donegal. The latter is also reported to be paying a 10c/kg bonus on heifers weighing between 330kg and 380kg along with a bonus ranging from 20c/kg to 30c/kg for Angus stock. There is also growing demand for cattle aged under 30 months and eligible for the Chinese market.
While demand for cattle aged over 30 months has improved, factories are cherry-picking lots and prioritising lighter carcases. A growing number of finishers report penalties being applied on carcases deemed overweight, with cuts being introduced at carcase weights of 400kg to 450kg. Many plants are operating a tiered penalty system, with typical cuts of 10c/kg to 20c/kg for weights described above. These finishers have also reported contacting farm organisations, with many saying the weight limits are in breach of the meat industry agreement which guaranteed at least a four-month notification period to lower carcase weight limits.
There is also more bite entering the cow trade, with regular sellers in cases securing an extra 5c/kg while others are witnessing the price pressure of recent weeks slowly abate. P+3 grading cows are trading from €2.55/kg to €2.70/kg, with O grades starting at €2.70/kg and rising to €2.75/kg to €2.80/kg. Fleshed carcases over 300kg are meeting stronger demand. R grade cows are starting in some plants at €2.90/kg, with those with more interest in cows paying €3.00/kg to €3.10/kg.
Bull throughput is seasonally rising, with 4,276 handled last week. This is still 552 head behind the corresponding week in 2018. R grading bulls range in the main from €3.40/kg to €3.50/kg, but there is a small number of plants trying to purchase at 5c/kg to 10c/kg lower quotes. Likewise, O grading lots range anywhere from €3.10/kg to €3.30/kg while better quality U grading bulls are selling from €3.50/kg to €3.55/kg. Again, carcase weights have an influence on prices paid so it is wise to establish potential penalties before moving stock.
British prices continue to creep upwards while the trade in the North has steadied. The latest AHDB price report shows steers and heifers rising 1p/kg to 2p/kg, with R4L cattle averaging £3.40/kg. With sterling strengthening to 84.7p to the euro, this equates to €4.01/kg and €4.23/kg including VAT. The latest LMC price report shows R3 steer returns averaging £3.33/kg (€3.93/kg and €4.14/kg including VAT), with heifers 3p/kg higher.
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