26 November 1999

Withholding cattle poses real danger

By Simon Wragg

PRODUCERS withholding finished cattle from markets in the hope of dragging beef prices up could undermine the premium being paid for British supplies, warn traders.

There are effectively three weeks left in which abattoirs can procure cattle to meet demand over the end-of-year sales period. Many acknowledge that cattle numbers are down, helping to firm values to 95p/kg (180p/kg deadweight).

Further minor increases are possible. But if finishers hold cattle, the longer term cost to the industry could be high, warns the National Beef Association.

Such a move could increase the margin between domestic and imported supplies. That could suck in overseas product suppressing UK production to such an extent that there may eventually be too little to compete with imports in the longer term, argues NBAs Robert Forster.

That could leave beef men facing a similar situation as pig producers. "Its enough to make you shiver at the thought of it. Producers must realise theyre enjoying a premium for British supplies if only they knew it. Prices are reasonable," he adds.

The UK reference price is well ahead of other main EU countries, suggest MLC figures. It is about 5p/kg higher than the EU average (k1.34/kg against k1.26/kg) and over 20p/kg more expensive than Irish supplies.

Abattoirs agree prices are firm enough. Operators such as ABP, MMP and St Merryn say they reflect the supply and demand. Only ABPs Bob White admits that returns could improve, albeit marginally.

Deadweight prices could edge up to 182-184p/kg for supermarket-type cattle next week, he suggests.

But holding stock in the hope of catching a rising market could be foolhardy, agree auctioneers and abattoirs. "It would be wrong; there is a risk that many could miss out," warns Rugby-based auctioneer Simon Draper.

At first glance higher prices are very encouraging news for finishers. However, most abattoirs agree there is some pressure from retailers to suppress increases ahead of seasonal price cutting wars.

Asda, Tesco and Sainsbury admit they are poised to introduce significant discounts on traditional joints such as topside and silverside (also pork shoulders) two to three weeks before Christmas. &#42