By Tim Relf
|Cattle prices have risen as confidence comes back to the beef industry|
But uncertainties in the beef industry have prompted some to question whether the money now being paid leaves room for profit.
“The store trade is definitely picking up,” says auctioneer Richard Wood at Ashford, Kent, whos seen the best steers on green CIDs around 120p/kg.
“The signs are that the fat trade has hit the bottom and is on the turn. People also have a bit of cash in their pockets after IACS cheques arrived.”
Supplies are also short, says Mr Wood. “People always want them at this time of year to replace recently sold stock. There is tonnes of silage around and barley is cheap. A few people around the ring are prepared to have a gamble.”
Auctioneer Scott Donaldson at Hexham, Northumberland, puts the rise in values compared with pre-Christmas levels at £20-£50/head.
“Its the old equation,” says Mr Donaldson. “If the fat trade rises 1p/kg, the store rises 5p/kg.”
Interest could, however, decline in March if finished values fall with a “glut” of bullocks then expected to be slaughtered after spending two months on the Beef Special Premium retention period.
“There is more confidence,” agrees Chagford, Devon auctioneer Timothy Garratt. The government aid package – “while a drop in the ocean” – has brought some confidence. “People now believe that the government is, at least, interested in the industry.”
The big difference – at times 30p/kg-plus – between the best and the worst price finished cattle make means that store buyers should source the best stock – and not be tempted to make false economies on feeding.
“You have to produce the premium article to make any money. Youll never make a silk purse out of a pigs ear. Youve got to buy the best, feed it right, get it in the right condition and market it when its ready. Too many farmers still measure quality by weight – and you cant measure finish or conformation by weight.”
Meanwhile Kelso farmer Ewan Brewis – who last bought stores in the autumn – remains cautious about going back into the market again before the spring when stock can be put straight on grass. “I would be dubious about putting much money into stores. Theres too much uncertainty.”
The lifting of the export ban, while promoting consumer confidence, may take some time before having any impact on prices. “Lets wait and see how many cattle will be eligible.”
And Glyn Owens, auctioneer at Knighton, Powys, has also seen this caution. “People are looking to buy at a price where they can see a margin based on todays trade, rather than banking on any increase.”
Last Fridays store auction at Knighton saw steers and heifers average 92p and 75p/kg respectively, compared with 98p and 84p/kg a year earlier.