Beef trade: Finishers wrestling back control as demand ramps up

Photo: Gerry Mooney

Martin Coughlan

March 22 2021 07:04 AM

I described the factory trade as being currently like a rugby ruck last week, with both farmers and factories fighting to claw the initiative away from the other side.

Last week started with processors generally conceding that base prices would have to lift by that 5c/kg. This put bullocks on a sound base of €3.80/kg and heifers somewhere between €3.85-3.90/kg.

Despite last week being a four day week due to the Patrick's day holiday the pressure from the farming side has not relented with indications continuing to emerge that the balance of power is possibly shifting to the fattener's side with several factory agents telling me that there are "Just about enough cattle coming" with one adding "We're turning nothing away."

And it’s that phrase “turning nothing away” that appears to be key with indications that despite last week being a short week throughput may very well be north of 28,000 as demand from the retail side continues to ramp up.

Despite numbers continuing strong the initiative on who opens the conversation on price appears to be changing as those with stock to sell appear to be more confident when naming THEIR price, although some appear currently a little unrealistic. The farmer who asked for a base of €4/kg for bullocks was told "Sure aren't you getting that already?"

A reference to the additional 20c/kg quality assurance paid on qualifying stock on top of the factories base offer of €3.80/kg. And what of those with Friesian cattle who have been offered flat prices? Is €3.75/kg, for example, flat in the current situation a good price?

Therefore, the general feeling is that, like the closing minutes of the France Wales rugby match on Saturday, the battle between factories and finishers on who will dictate pricing going forward is very finely balanced. While Wales held a ten-point lead with barely five minutes left on the clock, the initiative swung in Frances favour, and they clinched victory by two.

Turning to the trade for young bulls after a couple of weeks of upward movement, prices last week appeared to draw breath with U grades holding at €3.85-3.90/kg and R's on €3.80-3.85/kg while O grades appeared to have tightened pushing up by 5c/kg to €3.70-375/kg for continentals.

I'm told that under sixteen-month bulls are in demand and operating off a €3.80/kg grid base.

Demand for cull cows sees your O grading animal continuing to sell in and around the €3.20/kg mark or a bit with it. P's are on €3.10-2.90/kg while R grades range from €3.30-3.40/kg.

In all cases, 5c/kg more seems to be available once you have the numbers and the stock are well covered.

Data accessed by the north's Livestock and Meat Commission from the Kantar Worldpanel shows that the total volume of beef sales in the UK in the twelve-week period to the 21st of February this year grew 12.7pc to 165,000 tonnes.

This translates into a 15.8pc increase in actual spend totalling £1,152 million. Looking at the consumption picture in more detail, year on year sales of processed beef in the UK beef rose by 20.6pc, with their retail value rising by 1.4pc to £8.56/kg.

Steak sales also rose in this twelve-week period with volumes up by 32.1pc while retail prices lifted 2.2pc, all of which combined to push the overall spend on steaks up by 35pc.

On the burger side, retail sales volumes from the end of November 2020 to the 12th of February this year rose 27.2pc to 12,300 tonnes, with prices rising 5.5pc to €6.32/kg.

No wonder beef prices to UK farmers are so far ahead of here.