Finisher and shopper concerns as beef price hits £5/kg
© Tim Scrivener Store cattle surging past £3/kg and a record-breaking £5/kg base price from some deadweight outlets has led to some corners of the industry querying consumer budgets and finisher margins.
Forage shortages and rising costs restrained store cattle bidding before Christmas 2022, but a 42p/kg deadweight lift in the beef trade in 2023 has encouraged back buyers.
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Many of the cattle bought recently for May and June kill will need to gross more than £2,000 a head, finishers say. Some question how interest rates on overdraft facilities will hamper store-buying activity.
A rising market has left strong margins so far this year, but with record-breaking finished beef prices, some fear the product may price itself out of the market.
Tight supply
The trade certainly expects further increases. Two sources told Farmers Weekly there were “only a few days, not weeks” of beef hanging in the chillers.
Meanwhile, Irish prices, usually well adrift of the UK, are in line with UK trade at 490-500p/kg deadweight. Irish farmers have been buoyed by access to the Chinese market and recent news of China’s suspension of Brazilian beef (due to a BSE case).
Europe’s cow herd has continued shrinking, down 2.1% in June last year to 27.6 million. The same survey put 12- to 24-month-old male and female cattle at 14.2 million – a drop of 1.3% – driven by big contractions in Poland, Portugal and Spain.
Uncharted territory
John Royle, NFU chief livestock adviser, said beef has been performing well through the cost-of-living squeeze.
“Beef has seen less of an impact on demand driven by the cost-of-living crisis as it translates into a variety of meal choices, so it is a bit resilient,” he said.
Mr Royle said global demand had drawn some beef away from the UK market, helping domestic trade, but the competitiveness of UK exports – which totalled 158,000t at £640m last year – could come under pressure.
Stores break the £3/kg barrier
Store cattle prices are 50-60p/kg up on the year at Thainstone, where John Angus and the team at Aberdeen and Northern Marts have seen trade strengthen every week this year.
Commercial store steers first hit the £3/kg average on 10 February, and heifers matched this the week after.
Last week (24 February), a yarding of 1,523-head saw 777 bullocks level at 309.4p/kg and top at 359p/kg and £2,570.
An entry of 550 heifers averaged 302p/kg.
Mr Angus said: “Cows and finished cattle have been a strong trade for several months, and the stores really needed to catch up to keep businesses farming suckler cows.
“This is the first time I’ve seen the 550kg cattle make the same price per kilo as the younger, lighter cattle, and the small cattle are a good trade.”