Trade Talk - Rhys Davies
28th April 2016
Our last sale of suckler bred store cattle included a number of organic cattle. Twelve months ago, cattle topped at £1,445 for an organic Charolais cross steer. The top price at this year's sale was £1,210 for a smart 590kg Limousin cross steer. Welsh Black steers topped at £1,400 12 months ago, whilst this year, the top price for an organic Welsh Black steer was £1,140. A premium was clearly evident for organic cattle and Welsh Blacks.
The steers averaged 232p/kg 12 months ago and 195p/kg last week. Heifers 12 months ago and 191p/kg last week. This gave an overall average 12 months ago of 224.84p/kg and 197.30p/kg this year. This, on average, is a drop of £140 per head, on a slightly reduced entry of 300 cattle compared to 335 last year.
Overall it's the older and heavier cattle that have seen the main reduction - the main factor being the significant change in the upper limits that processors are paying for the cattle. A later spring and wetter ground conditions has also delayed turnout for some buyers.
The reduction in prices to below 320p/kg deadweight is also directly affecting the store market, with the increased supply of cull cows from the dairy sector and a rise in imports contributing to the downward trend of suckler bred beef.
Whilst there appear to be less suckler cows on farms, the increasing number of beef inseminations reported in the dairy herd is likely to plug a gap in the short term.
Longer term, the exchange rate will continue to play a significant role in on farm returns. From the low point of the last year, the pound is currently trading nearly 16% weaker against the Euro, which should help with exports and increase the cost of imports. There is also some hope that we will benefit from less rain for a few days, and increased temperatures will be here to stay.
"Managing volatility" is the common phrase quoted by industry commentators and economists. If your system has worked in the past, don't change too much. There will naturally be a response to processors' upper weight limits and suckler producers need to review how heavy they take their store cattle before offering them for sale.
On a more positive note, we hope that work to create a low risk TB area (equivalent to England's TB4 area) over a significant part of North Wales will come to fruition later this year.
Farmers Marts (R G Jones) Ltd