Stores badly need big dose of confidence
By Tim Relf
CONFIDENCE is an important word in the store cattle trade. Confidence about the weather, about the seasons grass growth and, most of all, about future beef prices. That confidence continues to be absent.
Having stood at 108.2p/kg in the week to Apr 24, a weakening trade took finished medium-weight steers to a low-point of under 100p/ kg in the second half of May.
This downward trend was mirrored around store cattle rings, with average values dropping 10p/kg in the same month.
But it seems this close relationship is breaking down. Prime steer prices rose to 104p/kg early this week while latest figures show store values falling further to 106p/kg.
Cashflow difficulties, with stock retained on farms, have continued to affect demand for stores, says auctioneer Peter Kingwill at Chippenham, Wilts. "Cold, dry weather has hit grass growth and left cattle shivering under hedges," he adds.
Entries have also been a factor, with higher numbers seen than usual in May. "Marketings had been postponed in the previous month due to the weak trade."
But with entries now expected to fall, the store trade should have bottomed out, suggests Mr Kingwill. Finished prices, too, should hopefully not suffer any further due to the BSE issue. "A blistering hot summer would, however, reduce retail demand."
But there is unlikely to be any vast improvement in values either, comments auctioneer John Holland at Reading, Berks. "Especially because new-season lamb values will now decrease as more and more come forward."
Demand for prime cuts of beef has held up reasonably well, says Mr Holland. It is the cheaper cuts that are suffering.
Farmers, meanwhile, are left facing losses on cattle bought as stores last autumn.
"Many of the bulls that are making 90p to 100p/kg now were bought for between 130p and 140p/kg last autumn," says auctioneer Glyn Owens at Knighton, Powys.
The loss for some bull beef producers could amount to over £70 a beast, suggests John Hughes, who sells at Lancaster.
Meanwhile, the smaller, top-quality Continental beasts continue to meet a good demand from local butchers, he points out. "But above 460kg or 480kg, the trade gets stickier. So it may be better to sell them early. For many, the old adage "The first loss is the least loss" is now applicable."
As for the weakening store cattle trade, meanwhile, Mr Hughes attributes it to "a general concern about where the finished trade will be when the big numbers start coming forward in the autumn". *