As last week progressed, various rumours began to circulate that factories were considering cutting prices. The main player in these stories was the cull cow price which was rumoured to be cut by 10c/kg this week.
Are they back? O grade cows bought last week for killing this week appear to be generally in the range of €3.40-3.60/kg with P grades by themselves making from €3.30-3.40/kg while your R grade cull is up around the €3.70/kg mark. However, factory agents appear to be under instruction to get average prices for culls back as this week progresses.
At the same time, except for an odd report, there does not appear to be any real concerted effort to pull either bullocks or heifers with their quotes remaining in general steady on €4.10/kg and €4.15/kg respectively, with a bit more being offered to those with numbers.
The current situation within the market is complex. On the one hand, demand from the processing sector over the last month has been so strong that flat pricing returned for everything from cull cows to over aged bullocks and yet we now see this effort to pull the price of cows, the lowest rung on the beef price ladder.
Backing up the argument that current factory prices actually reflect the demand that’s out there for Irish beef comes from statistics from the department of agriculture that show as of the 24th of April, Ireland leading the overall EU fourteen country average price table by 8c/kg from Italy on €4.09/kg as against the Italian average of €4.01/kg.
Traditionally this would have alarm bells ringing, but that €4.09/kg average is bolstered by the fact that our main market, the UK, continues to take huge volumes.
Indeed, Bord Bia data shows the UK average steer price to be 60c/kg stronger than here at €4.69/kg.
Therefore, the real issue is whether the UK price stays strong alongside a favourable exchange rate that currently sees the euro on €1.16 to the pound as opposed to where we are on the overall EU price table.
On the supply side, we’ve now had several weeks where numbers dipped to around twenty-eight and a half thousand.
What’s interesting is the fact that year on year, the numbers of bullocks, heifers and young bulls for the week ending May 8 are broadly in line with the same week last year. Some 10,099 steers as against 9,923 for the same week in 2020, 8,052 heifers as against 8,198 and 2,421 young bulls verse 2,480, a total of 20,572 as against 20,601.
The only fly in the ointment comes when you look at the numbers of cull cows, 6,984 as against 4,278 for the same week last year, an increase of 2,706.
In conclusion, factories would probably love to be able to regain control by using those extra cull cows to move the momentum on price in their favour, but it’s not working out with many of those culls now having to be bought in marts at prices that are eye-watering when compared to what they would make if sold direct.
One agent told me that at present, those culls are helping makeup factory numbers as he sees the supply of bullocks and heifers dwindle. Finally, what traditionally happens when the silage season starts? Numbers fall. Therefore good weather needed on all fronts.
