A sharp drop in beef prices at factories this week has shaken the confidence of farmers already coping with severe weather difficulties.
While some price adjustment in July was expected, in line with the seasonal pattern of the trade, the scale of the cut inflicted has been far greater than anticipated so early in the season.
Processors are being accused of taking advantage of the difficulties for many farmers experiencing the wettest summer for many decades.
Factory quotes for both steers and heifers have been reduced as much as 15 cent/kg, knocking up to €60/head off cattle prices at processing plants this week.
The general quote for steers this week ranged from 405 to 415 cent/kg (144p-148p/lb), and heifers are quoted at 415 to 425 cent.
It’s one of the biggest weekly price reductions for a long time and appears to have been set at a level to ‘cool’ the trade in advance of an autumn season which farmers who paid record prices for store cattle are facing with serious concern.
The early indications on Monday were that farmers were reacting with a ‘sell’ rather than ‘hold’ response to the price cut, and some processors were reporting intake flowing a little easier this week.
The factory intake last week increased by 450 head to 24,790 approximately, but remained significantly lower than the same week in 2011.
The steer kill increased to around 8,000 head last week, while the intake of young bulls continues to decline, and is now running at about around 2,700 head per week.
Returns from the factories show that there was an overall easing in cow prices last week, with the average paid dropping by 3-4 cent/kg.
This pattern has continued this week, with lower quotes for cows from most processors, but with some price variation between factories.
Base prices for O/P grade cows range from 330 to 360 cent/kg in general, but farmers are negotiating deals for up to 15 cent/kg more for better quality cows.
The quality R grade cows have eased back to a range of 350-385 cent/kg.
The beef trade in the UK is reported to have been well balanced last week.
Cattle prices have firmed, with R4L-grade steers averaging equivalent to 460 cent/kg (164p/lb) including VAT.
On the Continent, it is anticipated that once weather conditions improve, demand for seasonal product should lift.
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