Processors blame 10c/kg beef price cut on falling demand

Irish Independent

2 days ago

This reverses the gains made over the last month; the processors claim that the market can no longer support that level, with a fall in supermarket demand.
Key to this downturn is what is happening in the UK, and the fact Irish beef prices are now far above the EU average.
Across the water, pressure is being applied by consumer resistance to increased retail prices, and rising numbers of short-keep stock, including young bulls.
This resulted in prices to suppliers in the UK dropping by the equivalent of 12c/kg, with R grading Angus bullocks and heifers on €8.20/kg and other R grades on €8.08/kg.
Those at the coal face in the UK expect quotes to fall again this week by another 6-12c/kg.
In Northern Ireland R3 bullocks and heifers dropped 5-12c/kg last week to €7.57-7.69/kg, with cull cows down 25c/kg to €6.17/kg overall.
Bord Bia shows that the Irish composite price had been below the EU benchmark average from the end of July last year, but parity was reached in mid-December.
At the end of February when the Irish price broke the EU average, reaching its zenith in mid-April when prime R3 beef here averaged €7.73/kg as against €6.37/kg for the rest of the EU – a gap of €1.36/kg.
As of the week ending May 10, that gap had closed to 98c/kg as European prices strengthened to €6.58/kg, with the Irish average slipping to €7.56/kg.
On the mart front, several managers noted that Northern buyers who were very active two weeks ago only 'picked at cattle' on Friday and Saturday.
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One manager said they 'appeared preoccupied' – understandable given the reduction in prices north of the border.
All this does not bode well for the trade here, but the processing sector still needs adequate numbers to make price cuts stick – and the kill over the last month has been hovering around 28,000-28,500 a week, so supplies are not overly plentiful.
While €7.40-7.50/kg is where official quotes are now at, one seasoned observer noted that those figures were for 'the ordinary farmer'.
He reckons that for factories to continue to get the numbers they require, they will have to continue 'to pay up to €8/kg to bigger feeders with numbers' and that 'someone has to make up the difference'.
That someone it appears is yet again the farmer with small to handy numbers.
However, those smaller operators report flat prices for Friesian bullocks under 30 months of up to €7.60/kg, with continental heifers selling to €7.90/kg and bulls under 16 months achieving grid bases of €7.60-7.70/kg.
If the factories make this latest cut stick, it will mean that the bounce in quotes of 10c/kg seen 10 days ago as barbecue beef sales and optimism rose, has been replaced by the smell of unsold beef in sheds now burning money.