Deadweight prices reach £5/kg
Prime cattle prices have continued to rise throughout March, with a tightness in the supply of cattle continuing to be a concern to the processors. R4L steer prices for the week ending 25th March were 499.8p/kg.
Recent data from QMS and BCMS show that the number of cattle in the 12-30 months age bracket is 3.3% lower than a year ago, a large contributor to that is the number of store cattle that continue to go south of the border.
Towards the end of March deadweight prices have risen to new highs, with prices well over 500p/kg achievable on full loads of in-spec handy weight cattle. As the numbers of cattle available have tightened, some processors, in an attempt to secure more cattle, are willing to pay full weight on cattle up to their weight limit with no deductions on the heavier cattle. This is great news to finishers who have had to pay substantially more for store cattle in 2023 as it increases the possibility of a reasonable margin being made on these cattle.
It is however somewhat frustrating, as an industry, as we had made significant progress in reducing carcass weights in response to clear market signals.
In addition to weight limit changes, there is also more openness to contracts for cattle from processors, again to secure numbers, this has given many of the finishers who have signed up to them confidence to keep buying in the store ring.
Store cattle continue to be a very strong trade, with most weight bands averaging 300p/kg or more across the store sales in Scotland. Forward stores continue to be the most sought after, which is no surprise, given the current finished price and the short-term confidence in the price.
The trade for grazing cattle, whilst still being strong, is slightly more cautious due to the longer keep and uncertainty around prices longer term.
Cull cow prices continue to be high, as the demand for manufacturing beef continues and there are also fewer cows coming forward at this time of year. Deadweight cow price is now around 435p/kg and the live ring is often providing a stronger trade on the cows than deadweight can.
Beef herd reduction & implications
There continues to be a concern around suckler cow numbers and the contraction of the breeding herd in Scotland, with a 3.3% reduction in over 30-month beef bred females compared to a year ago and data from QMS and BCMS also illustrating fewer under 30month beef bred females on farm than a year ago, this will mean by late 2024 there will be fewer stores and finished cattle available, the question will be where the demand will lie by that time.
There appear to be less suckler herd dispersals being advertised than at the tail end of last year and whilst this may partly be down to the time of year, it may also be that current cattle prices both store and finished may be encouraging beef producers to stay in the game. With many breeding cattle sales due in the coming months, it will be interesting to see what the value is in these cattle and whether the recent high prices are encouraging producers to reinvest in breeding stock.
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