15/07/08
Finishers can resist the determined effort to pull back the price of slaughter cattle because the forces which drive the market are tipped firmly in the sellers favour.
The National Beef Association says efforts are being made by some abattoirs to pay significantly less for both prime stock, and cows, even though their beef stocks need to be built up before the usual lift in consumer demand this autumn.
“The situation is bizarre,” explained NBA director, Kim Haywood. “Cattle supplies are tighter, and everyone who processes beef needs as much throughput as they can get their hands on to keep slaughter plants operating at full capacity so they will be able to meet greater retail demand for both forequarter, and manufacturing cuts, from September.
“It very much looks as if some companies are trying to panic finishers into offering more animals by deliberately pulling down the price and hoping that fear of the trade dropping further will frighten additional stock onto the market.”
“If this is correct, and it very much looks as if it is, it seems that instead of paying more for cattle that they need some processors are intent on tricking feeders into thinking they face a falling trade.”
“The same situation occurred in the Republic of Ireland recently, but finishers resisted the ploy, and quickly saw the price rise again, and the NBA hopes this is what will happen here.
“Slaughterers were not happy when the British steer price average topped 280p per dwkg at the end of June. Confirmation of an organised effort by some to make cattle cheaper came with the 1.3p fall in deadweight prices two weeks ago, and 2.5p drop in live weight averages last week,” said Ms Haywood.
“However not all companies are joining in. They know that domestic supplies of finished cattle are tighter, and beef exports to the EU are also tight because the exchange rate has decreased margins, although more home-processed beef is being exported because imports into the EU from South America are virtually non-existent.”
“In these circumstances there is still room for prices to move up. Finishers need every penny they can get to cover steeply rising costs and processors need more cattle throughput to keep costs down.”
“Every feeder in the country must make sure they know what they have been offered before cattle are put on the wagon, no-one should accept less than they were getting three weeks ago, and more effort should be made to discover which companies are paying the highest prices and divert as much stock as possible towards them,” Ms Haywood added.
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