9 February 1996

Markets wait for finished cattle surge

By Tim Relf

MARKETS are still awaiting the widely-expected backlog of finished cattle, held back when prices slumped before Christmas due to adverse BSE publicity.

Although auction throughputs are currently low – 14% under last years levels during the first four weeks of January – analysts predict that prices will hold firm even if marketings rise.

The MLC – which predicts an extra 40,000 animals could be seen over the first half of the year – says the backlog has been very slow in appearing.

Prices, meanwhile, averaged about 119.6p/kg during January, less than 1% down on the same time in 1995.

And farmers, realising there may be little scope for price improvements, may sell stock as soon as it is ready, says MLCs economic policy analyst Duncan Sinclair.

Cattle could also be off-loaded as farmers look to make space in buildings for lambing.

"There are also some animals in the Beef Special Premium retention period which will be marketed in February and March," says Mr Sinclair.

Auctioneer Robin Jessop at Northallerton says he has seen no surge in entries. "But there is a limit to how long producers can hold onto them, or they will get too fat."

Marketings will also be prompted by the high forage prices in some areas, points out NFU livestock advisor Carol Lloyd. And another cold snap could quicken this, she suggests.

Another downward influence on trade continues to be slack domestic demand.

Research data from Audits of Great Britain show retail sales of beef in the four weeks to Dec 17 dropped 17% compared to the same period 12 months before. And in the four weeks to Jan 14, the year-on-year decrease had widened to 17%.

But export demand continues strong, and this looks set to buoy up prices.

The proportion of total exports to other EU countries accounted for by clean beef in the first four weeks of 1996 has risen by over a fifth. (This does, however, partly reflect the decline in demand for cow beef.)

Overall demand should be strong enough to hold prices relatively steady, agrees auctioneer Nigel Stephenson at York.

He saw 100 more finished cattle sold on Monday than in the previous week. The rise partly reflects the backlog coming forward, he says.