September 13, 2011

 

UK beef market rallies over daily price rise

Local and export demand for British beef is so intense that disregard the rule book to ensure they have cattle for their orders, the National Beef Association said.

 

Hunger for in-specification prime stock hit unprecedented levels last week and buyers have been instructed by large companies to ignore list prices set at the end of the week and pay whatever is necessary to meet demand which resulted in competing companies offering up to eight cents a kilo more than had been agreed just a weekend earlier so they could be sure of meeting retail and export orders.

 

Last week North Yorkshire beef supplier Dovecote Parkime emailed its regular suppliers offering to pay at least eight cents, or about US$32 a head, more for in-specification stock than the price listed by its main rivals.

 

Dovecote Park is currently setting the pace in England with offers of a US$5.27 base price for commercial specification cattle which compares well with the US$5.19 listed just one working day earlier by its biggest competitors, said NBA chairman Oisin Murnion.

 

However, Murnion said it may just be a matter of time before it is gazumped by other frontline buyers, like Woodheads, because they too need cattle and will pay what it takes to make sure they get them.

 

The Hexham-based association is urging its members to be aware that prices are moving forward on a daily basis and should not be left behind by asking too little when completing a sale.

 

The market is so hot there is a real risk of feeders underselling their stock because ex-farm prices are quickly galloping well ahead of the already outdated list price figure many still use as a marker, said NBA director, Kim Haywood.

 

Haywood said finishers need to be confident about being able to demand more than the purchaser's original offer so new price levels, which more accurately reflect the extraordinarily bullish conditions of the current prime cattle market, are constantly re-established.

 

He added buyers have had the whip hand for a long time and have been able to nominate their base price for commercial R4L steers and heifers on a take it or leave it basis."

 

But over the last 12 weeks market prices have been lifting so rapidly that list prices are being ignored, according to Haywood.

 

Dovecote Park is also challenging other processors by offering a base of US$5.71 for Angus cattle and many Scottish buyers will already be paying more than US$5.32 to secure good loads of commercial stock. Haywood is concerned that feeders who are used to buyers being in control will be pleased to accept a payment of 2-3 cents above the list price instead of checking out the market properly and demanding 6-8 cents more instead. Some buyers might still puff and bluff when asked to pay more, but cattle are short and prices have been at record levels ever since they smashed through US$5 at the end of February, he said.