Friday, 11 June, 1999
By Simon Wragg
FINISHED cattle must be marketed when ready and not held back in anticipation of better prices, otherwise imports will be sucked in their place, warn abattoirs.
Already figures have shown a slump in throughput in recent weeks, partly due to the interruption of the Bank Holiday to market days. But the trend is expected to continue.
According to the trade, numbers could be back on last year by 20% from October onwards .
This situation is adding to current calls for finished animals to be marketed, particularly as the amount of beef eaten is increasing.
According to MLCs senior economic analyst Duncan Sinclair, the most recent consumer census taken in April suggests a 3% rise in demand.
With this in mind, the National Beef Association expected tighter supplies to have pushed prices forward. Instead, the long-term 8-12% fall in finished stock has failed to express itself in stronger prices and you have to ask why?, says the NBAs Robert Forster.
The concern is that prices are being held down currently by pressure from retailers.
Although not obvious, this could be applied by buyers leaving the fat ring and taking forward or finished cattle from store sales, despite stronger prices. This is particularly likely at northern markets attracting stronger types.
According to Hexham markets Scott Donaldson, although stores are more costly and would have to be held on-farm to re-coup levies worth 12 a beast, they can be turned around quickly.
This could explain why demand for finished cattle is behind expectations.
These concerns are expressed by Rugby-based finisher John Bell. He agrees with the NBA that prices have not moved in line with lower numbers forwarded.
If I was to look for a comfortable return now it would be 185-188p deadweight, not the 177p/kg weve got.
As managing director of the 25 member-strong Meatgold producer group, finishing 5000 cattle annually, he says producers are concerned that corners may be cut in the supply chain. This could affect quality for the sake of accommodating a shortfall.
For example, if a retailer or supplier is tempted to cut the maturation time by a day – gaining a days supply effectively – the eating quality of beef could fall and affect consumption. That would exacerbate values for the producer.
Although price control remains taboo, abattoirs admit that supply and demand is already running tight, due in part to retailers supply protocols.
Midland Meat Packers Richard Field says the supply situation is becoming ever-more difficult and will come to a head later this year.
With almost no room for buffer stocks for fresh chilled beef, the sector is facing a balancing act all the way.
The main concern is with increased beef premium later this year and the introduction of a slaughter premium after the new year producers may be tempted to hold on to stock.
I think industry has to be realistic; rather than expect fantastic prices, if a shortfall gap opens imports will be sucked in, he warns.
Current beef prices are running 10p/kg a head of this time last year at almost 95p/kg.
These could improve over the next few weeks if demand continues with lower numbers, says Mr Sinclair. This is a realistic move and a real price push is expected later in the year.