Downwards Pressure slowing down ?
Despite the supply/demand balance still being very narrow, in week ended 23rd May the deadweight cattle trade edged up in some areas. At 325.2p/kg the GB all prime average was a fraction up on the week, which brought to an end the consistent trend of falling prices which have dominated the trade so far this year. With slaughterings estimated to be back around 2,200 head on the week earlier, the effect of tightening domestic supplies has just tipped the balance into producers’ favour. However, with the overwhelming trend having been downwards for some time, it does mean the average price is still trending below the five-year average for the time of year. Reports suggest that, despite some starting to feel the impact of tightening supplies, processors are continuing to take a cautious approach to procurement. Steers meeting R4L specification are still back almost 10p over the month to 337.2p/kg while heifers of the same specification were 11p cheaper at 333.9p/kg. R3 young bulls were back a similar amount over the same period at 316.1p/kg.
The expectation of tightening supplies as the summer approaches is supported by recent data from BCMS. The figures indicate that the number of beef-sired cattle on the ground in the imminent slaughter age range is notably lower than at this time last year. This suggests that the balance in the trade could move into a position that is less out of kilter fairly quickly, particularly as the season is in its transitional period between yarded and grass-fed supplies. However, with the current fine weather unlikely to stimulate demand for roasting cuts, caution amongst processors could persist in the short term. Coupled with the euro exchange rate and its impact on the competitiveness of imported product, this could well keep a lid on the trade.