High store cattle prices in auction marts could make beef finishers’ profits marginal, as slaughter prices fail to keep pace.
Auctioneers have seen a slight easing in the store trade in recent weeks, but the increased cost of feeding and housing cattle through the prolonged winter means beef margins are looking tight.
“Store prices are way too dear for finishers to be making any margin but they’re still buying in the hope that beef values will pick up by the time those animals reach slaughter weight,” explained Patrick Dennis of West Country auctioneers Kivells.
“Back at the start of February there was certainly an anticipation that store numbers would be tight and so people were paying top dollar,” said Peter Kingwill of Ashford auctioneers Hobbs Parker.
“Finishers were holding out for improved beef prices but there has been no sign of any upward movement so the trade seems to have checked a little.”
The tightening supply of growing cattle is down to a number of factors. Suckler cow numbers have been following a continuing downward trend while increased TB movement restrictions have meant there haven’t been the numbers of breeding stock available.
Although the value of store cattle may be high now, it doesn’t mean that suckler producers are making vast sums, warns Hexham auctioneer Scott Donaldson.
“This long, harsh winter has put incredible pressure on store and suckled calf producers. With straw at £95/t and round-bale hay at £30 a bale there is hardly any room for profit.
“The current lack of store cattle in the markets will inevitably have a knock-on effect on the fat trade. In the next six months we could well see a reduction in slaughterings and a subsequent rise in finished prices. Realistically they need to be nearer to the £3/kg mark to sustain the trade.”