October 23, 2008


UK cattle prices affected by economic crisis


The National Beef Association has reported a cross-UK fall in slaughter cattle prices that has ignited anxiety among processors, regarding a slow-down in consumer spending and fears within the meat trade and that there could be an unexpected pile of unsold boxed beef stocks approaching Christmas.


While it anticipated some temporary downward pressure on prices because of general worries over the future strength of the economy, the NBA says many of the cuts are already too severe and has accused some buyers of not being able to resist the opportunity take more off the farm gate price than market circumstances permit.


The Association's director, Kim Haywood said there are huge differences in attitude between companies. Some have reacted reluctantly to the possibility consumers may buy less premium cuts of beef and have taken a cautious approach when easing their own purchase prices as they know further falls in farm income risks triggers reduction in future cattle supplies.


However, others are less willing to offer protection to their supply chain and have taken a short sighted, self centered approach by not only slashing back prices more than necessary, but by threatening to make further, deeper cuts next week too.


In view of this issue, the NBA has no hesitancy in encouraging feeders supplying companies which have stripped most of the price, to assert themselves in the same way they did when faced with similar problems earlier this year, by trading with other processors or selling through livestock markets to get better prices.


Finishers who protect themselves against declining prices will be helped by un-seasonally tight levels of cattle supplies and a continued reduction in imported beef volumes, which despite what is happening to previous farm prices, will very soon focus more demand on hom produced cattle.


According to the NBA some of the biggest falls have been in Scotland where (with the exception of Scot beef which is reported to have dropped the value of its standard R4L steers by 5p a deadweight kilo) , there has been a general 7p fall with threats of an additional 8p crash next week too.


Similar developments are reported in England and Wales where Dovecote Park (277p) and Woodhead Brothers (275p), which each have justified reputations for being sympathetic towards finishers, have eased back their standard prices with moderation, while ABP is again amongst the worst offenders and is reported to be ready to buy this week's standard R4L's for just 258p.


Ms Haywood said some buyers of English and Welsh cattle have said they are prepared to drop their prices by a further 5p next week and feeders must resist these moves with all the strength they have.


All the big processors, including those paying the lowest prices, need a good supply of matured beef going into cold storage from early November six weeks ahead of the peak Christmas trade and will therefore have to buy cattle from now on if they are to avoid being caught with only scarce freshly killed beef on hand to fill pre-Christmas orders.


Feeders and finishers accept there are fears that consumption of premium cuts has been shaken by the recent flood of negative, economic news. However if purchases of mince and stewing steak remain strong over the next couple of weeks, the trade should then be relatively confident that demand for roasting joints and other hindquarter cuts over the Christmas period should increase.


Ms Haywood added, in spring, there was an air of confidence amongst beef producers, but the combination of a dreadful summer and the late harvest, soaring input costs and the global credit crunch is making producers very cautious.


The last thing needed is for the multiples to start putting pressure on the price of beef. If prices start dropping again it will seriously make many producers think hard about whether they should continue production.