Cattle Prices Dragged Down by Failing Economy

UK - The National Beef Association has reported a cross-UK fall in slaughter cattle prices on the back of anxiety among processors about a slow-down in consumer spending and fears within the meat trade there could be an unexpected build up of unsold boxed beef stocks in the approach to Christmas.
calendar icon 22 October 2008
clock icon 3 minute read

But, 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 being unable to resist the opportunity to take more off the farm gate price than market circumstances dictate.

“There are big 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, because they know further falls in farm income risks triggering reductions in future cattle supplies, “explained the Association’s director, Kim Haywood.

"There are big differences in attitude between companies."
Association’s director, Kim Haywood.

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

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

“Finishers who protect themselves against falling 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 ex-farm prices, will very soon focus even more demand on home produced cattle.”

According to the NBA some of the biggest falls have been in Scotland where (with the exception of Scotbeef 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.

“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,” said Ms Haywood.

“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”.

“In spring, there was a real 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 we need 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 will continue production” added Ms Haywood.

F D Roosevelt: “ We have nothing to fear but fear itself”.

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