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Agribusiness News February 2023 – Beef

2 February 2023

Prime cattle price lift in January

Retail demand for red meat remains high, which has led to several processors increasing prices in January to source finished cattle. Processors are actively looking for cattle, many without waiting lists.

The continued reduction of the Scottish suckler herd – less than 400,000 breeding beef cows – is now influencing supplies of both store and finished cattle. Finishers emptied sheds pre-Christmas on the back of strong finished prices, with consumers opting for red meat on their Christmas tables, which is now hindering the numbers available for slaughter. This tightening supply has led to a growing shortage of all types of cattle, which is strengthening prices.

At week ending January 21, Scottish R4L steers were sitting at 465p/kg deadweight. Irish price is now above ours, supported by the export market. The finished price might look good on paper however, current returns for finished cattle are still not in line with the increased costs involved – input costs have increased by 40%.

Store cattle on fire

Store cattle prices in January have started very strongly. As finishers look to fill sheds, this along with a tight supply and an ease back in the price of barley, has seen a great demand for store cattle at the start of the year, with cattle in excess of 500kgs keenly bid for. However, as we have alluded to, finisher margins remain to be squeezed, with prices paid recently for some of these heavier continental types leaving very little margin.

Going forward, it is likely that a two-tier market will develop with heavier, quicker finished stores in demand, with finishers not wanting lighter, longer keep animals. We could be seeing a greater divide between efficient units turning over large numbers quickly compared with more extensive, grass-fed systems.

Store sales at the start of January were strongly supported by English buyers, as the supply of continental bred calves tightens south of the border. With reports of high numbers of Scottish stores being sold into England to be finished, undoubtedly, the supply for Scottish abattoirs will tighten. It will be interesting to see how processors respond, as retailers are already reluctant to pay more due to the current economic consumer crisis.

Mince demand

The phenomenal demand for cheaper manufacturing beef (mince etc.) continues with the price farmers are receiving for cull cows still incredibly high. Cows are now being sold at 400p/kg deadweight, with the live market for well fleshed cows surpassing all expectations with numbers going through the ring increasing each week. A number of marts reported average prices for cull cows increased throughout January, with a record price of £2,750 paid for a 1196kg Charolais cow in Aberdeenshire. The strong demand for cheaper beef is likely to continue as consumers struggle with the cost of living and January credit card bills.

The number of cows being culled is not only due to attractive price. Higher feed and fuel costs, and the unprecedented increase in fertiliser, are behind many decisions to cut cow numbers resulting in an acceleration of the reduction of the UK’s breeding herd.

The reality for many farmers is that cashflow will have a strong influence on 2023, and if suckler herd business efficiency and viability is to be maintained, businesses may need to consider longer-term strategies.

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