Price increases as factories seek stock ahead of Christmas trade
The full close-down period at the factories for Christmas has shortened in recent years to a few days with the need to replenish the supermarket shelves post-Christmas.
If good things come to those who wait, according to the old adage, then maybe it has come to the turn of the beef finishers to get a little of the benefit for waiting.
A slight increase this week on the prices being offered by the factories for the prime cattle has been driven by demand at the processing plants to get the extra stock ahead of the Christmas trade.
Supplies are beginning to tighten. Last week's intake — a shade over 39,000 head — was the lowest since early October, excluding the shorter week for Halloween.
Usually, the most lucrative season of the year for the factories, the tighter supply this year, relative to demand, is resulting in small margins of improvement on the returns to the producers.
Another 5 cents/kg for both steers and heifers this week is welcome as the competition between the factories for cattle is continuing to put pressure on the procurement departments to deliver on requirements.
The general quote for steers has moved to 465 cents/kg with an increasing percentage of the intake costing the plants 470 cents/kg, as producers adopt a hard selling policy before parting with their stock.
The situation is similar for the heifers. They are being quoted on a base of 470 cents/kg, with more of the intake making 475 cents/kg and some larger lots of quality heifers from regular suppliers fetching a base at 480 cents/kg, which in general is hard to achieve.
There is little more than a fortnight left for the factories to secure stock for the pre-Christmas orders, giving the requirement for at least 21 days hanging before sale.
While the pressure appears to be on the factories, finishers are also at a crucial point of decision on whether to sell or hold out in the hope of further price increases.
The full close-down period at the factories for Christmas has shortened in recent years to a few days, with the need to replenish the supermarket shelves post-Christmas, but mid-January onwards can be a bleaker period, as consumer spend usually tightens.
Total intake for the year to date is now down by 49,700 head and the lack of clarity as to the supply of finished cattle in the pipeline is down to a guessing game, so taking advantage of the pre-Christmas market has to be weighed against speculation on the markets for beef during the early weeks of 2024.
The young bulls are continuing to return a premium over their equivalent steers, with 480-485 cents/kg for good quality R grade the going rate. The cows are a steady trade for a large throughput, with R's making 420-430 cents/kg and a little more for lots of very well-fleshed cows.
As already mentioned, the kill for last week slipped back at 39,038 head. The drop was reflected across each of the main categories. The intake included 13,838 steers, 10,538 heifers, 11,969 cows and 2,134 young bulls.
