Finished cattle trade falls on new year trend

The cattle trade is following its downward seasonal trend, but factors including retailer-driven specifications and Irish production estimates are causing uncertainty.

The second full week of trading since the new year saw the average GB all steers deadweight price lose 2.1p/kg to 330.3p/kg in the week ending 16 January, following a 3.1p/kg fall the week before.

It is now 35.2p/kg lower than the same time last year and almost 30p/kg lower than the five-year average for the new year, although this includes 2011 and 2012 highs.

The beginning of the year often experienced a lull, said Debbie Butcher, senior analyst at AHDB Beef and Lamb, but it was difficult to know at this stage how long the downturn would last.

However, there were a number of factors that could make things challenging in the cattle trade this year, said Ms Butcher.

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On the domestic front, UK production was expected to be higher and could come up against increased competition from cheap Irish imports, where throughput is projected to grow by 50,000-80,000 head, according to Bord Bia, the country’s food board.

Internationally, there was little sign the strength of the pound against the euro would weaken significantly, said Ms Butcher.

UK exports would increasingly have to compete against those from EU members such as Poland, which had ramped up production and had lower costs, she added.

How producer returns were affected would in part depend on livestock type, said Ms Butcher.

With all the major processors having now tightened their carcass grading specifications to meet retailer demand, finishers with heavier animals would be penalised and those with dairy-bred livestock would miss out on beef-bred premiums.

More specialised finishers, particularly those selling into certified retailer schemes, would fare better though, said Ms Butcher.

In Scotland, the average steer price was about 16p/kg higher than the GB average in the week ending 16 January.

But many producers were struggling to meet lighter grading classifications, said Iain Macdonald, senior economic adviser at Quality Meat Scotland, with the average carcass weight having edged up to 400kg.

John Royle, chief livestock adviser at the NFU, said an awful lot of money had been wiped off the grid.

“Penalties are now harsher and bonuses are a bit more, but comparatively penalties are more,” he said.

However, he said on the positive side processors and retailers were looking for British beef and it was important the beef industry keep up the pressure so that retailers weren’t tempted to buy cheaper Irish produce.

At Ashford cattle market in Kent, auctioneer Peter Kingwill was also positive.

“There’s no great evidence in our area that there will be much greater production,” he said.

However, he said producers were likely to start pushing cattle through two to four months earlier to meet lighter weight grading specifications.