Beef grief…could a big dip in prices be on the way?
Spring beef flood could send prices plummeting soon
FARMERS fear a glut of cattle could hit the market in the coming weeks, driving prices down.
The worry is that big numbers will now be sold, having begun the two-month beef special premium retention period on Jan 1.
"The price will probably plummet," says North Yorks farmer Nick Baker, who had a batch of spring-born animals come off retention earlier this week. "I would have sold stock earlier to take advantage of the better prices, but I have been caught in the retention trap."
The trend towards spring-calving suckler herds means more farmers have bullocks to sell after early March, says Mr Baker. "We are all in the same boat."
Mr Bakers plan now is to hold on to animals, taking them to about 650kg lw and sell them from next month onwards, by which time, he hopes, the rush will be over.
Whether people delay selling stock depends on cashflow, says Brian Clothier, who farms on the Mendip Hills. "Farmers that are not that tight for cash may watch the market and play it week by week. Others may shift them all straight away."
But any surge is likely to drive prices down, reversing increases seen over recent weeks, says Mr Clothier. And the recent rises in cattle – and sheep – values could well prove to be just short term, he reckons.
"Supermarkets are controlling a bigger proportion of the meat sold, and they have the power to do what they want. Once we hit June we could be in for a hiding again."
The 100p/kg lw figure is the minimum that beef finishers want, says Mr Clothier. "Anything less than that and you just as well not bother doing the job."
But Oxon farmer Robert Florey reckons that the underlying shortage of cattle – partly a result of the calf slaughter scheme – could bode well for prices. "There just are not the numbers around."
His latest batch of animals – R4L Aberdeen Angus steers – made 210p/kg dw. "Given the market conditions, that is reasonable," says Mr Florey. "We are certainly moving in the right direction."
Auctioneer Michael Parry at Gaerwen advises finishers to keep selling cattle. "We are encouraging people to market stock steadily."
Any glut of animals coming off retention could be smaller than expected, and short-lived, he suggests. "There is no need to panic." Holding back stock will just result in bigger numbers in the weeks to come, he adds.
"The beef trade since Christmas has been better than everyone expected," says Mr Parry. Fears of a big influx of Irish beef have proved unfounded. "There seems to be some evidence that the UK supermarket chains have stayed a bit more loyal to the UK farmer."
Meat and Livestock Commission economist Duncan Sinclair is not expecting a flood, either. Last year, weekly GB prime cattle marketings ranged from 35,800 head to 36,700 in February. And in March, the weekly figure ranged from 36,400 to 36,800.
"There is potentially a much bigger bulge in supplies likely to hit the market after March 2000," says Mr Sinclair. Farmers, he reckons, are likely to hold off selling at the end of this year to take advantage of the higher beef special premium rates under Agenda 2000.