Buoyant store prices putting profits at risk?
Buoyant store prices putting profits at risk?
By Tim Relf
STORE cattle prices are buoyant, igniting fears that people are pricing themselves out of a profit.
Abundant grass has prompted strong competition for stores, but whether it is justified is another matter. As one auctioneer says: "Farmers would rather waste their money than waste grass."
"Bearing in mind the current finished trade, stores look over-priced," says Haig Murray, auctioneer at Longtown, Cumbria. Last weeks sale saw bullocks and heifers top at £508 and £440, respectively.
"People are looking for the subsidy," says Mr Murray. But they are probably paying over the odds for those on green CIDs with two subsidies left, he reckons.
He also attributes much of the interest to the good grass crop. "There is oceans of it." And store buyers are also gambling on finished values improving.
Mike Evans, auctioneer at Hereford, agrees. "People live in hope," he says. The calf slaughter scheme should contribute to a tightening of numbers, reckons Mr Evans. Meanwhile, although the better stores are selling well, the poorer-shaped beasts, and those near 30 month of age, are hard to place.
"People keep saying the supply of finished cattle will dry up. This could be the case, but at the moment they just keep coming," says auctioneer John Hughes at Lancaster. And it has to be an exceptional prime animal to top the 100p/kg mark now, he adds.
Fran Evans, who farms near Taunton, Somerset, has already seen finished stock prices picking up. "We are now selling the baby heifer calves that we bought for £40 each two years ago. It was good silage last year, so it has been the cheapest winter we have ever had.
"There is about £70 profit in each one at the moment," she says. "But we have to make up for the year-and-a-half we were losing money." The result, she says, is that at least now there is "light at the end of the tunnel". *