Mixed Messages From Markets

[Frank-the-Wool]

Cattle prices continue to rise in the live markets, yet deadweight prices are falling. The differential between Scottish beef and the rest of the country is at a low point according to AHDB, in an extract from their report below:-

Cattle trade direction of travel becomes clearer

In week ended 18 February the direction of the cattle trade became clearer. The GB all prime average price drifted down for the sixth consecutive week to 348.7p/kg. Easing just over half a penny on the week it meant that the measure has come back 5p since the start of the year.

While this drift from an overall GB price perspective is not particularly dramatic, a feature of the trade over the month has been the differentiation emerging between developments in Scotland and those in England and Wales. In England and Wales there is subtle downwards pressure on the trade while in Scotland, given high chill room stocks it is more intense and booking queues are lengthening. Steers meeting R4L specification in England and Wales averaged 359.5p/kg, down 6p since the turn of the year, while in Scotland at 362.9p/kg they have eased 8p/kg over the same time period. The differential between the two regions is now just 3p/kg, very narrow in a historical context.

Yet as reported on here we are seeing store cattle at eye watering prices.

Yet lamb/hogget price continues to weaken and again from their report this looks as if too much supply has just hit the markets:-

Higher supplies weigh on liveweight market

The liveweight lamb market has weakened in the past week following higher numbers of lambs coming forward.

In the week ended 22 February, the GB SQQ fell by 2p compared to the previous week, leaving the measure at 170.4p/kg. This means that prices have remained within 2p of the 170p/kg mark since the turn of the year. Despite the apparent price stability, given that the trade was moving up at this time last year, it means that the SQQ has now moved to be 15p lower than at the same point in 2016. This fall follows a higher number of lambs being sent to markets in the past week. Throughputs at GB auction markets were five per cent above the previous week and moved above 2016 levels for the first time this year, with numbers up nine per cent on last year. The trade was more subdued at the beginning of the period, with price falls towards the end of the Thursday to Wednesday week being slightly smaller. The GB SQQ on Wednesday 22 February was back 2p on the previous week.

Probably the greatest concern for the sheep producers is the low ewe price that is not helped by the large numbers of heavy hoggets at low prices.

Pig prices are much higher than a year ago, but as grain prices have risen, profitability will be falling and I presume the same is true of Chicken, however these have little influence on red meat values.

Not wishing to be unduly pessimistic but I am struggling to see what will turn around these falling prices in both cattle and sheep.
It is very unlikely that the pound will fall further against the euro when Article 50 is triggered and there is a possibility that it may strengthen as economic figures are improving and once again we have inflation in most things except livestock production.

It has only been the weakness of sterling that has protected us up until now.
Where next for prices?

 

[GTB]

Not looking good I'm afraid. It's going to be tough this year and for a few more years.

 

[spin cycle]

my price is still 30-50p/kg over last year....bit of an assumption that sterling won't weaken after article 50......of course a le pen win would destroy the euro....but if she looses it would strengthen considerably......fact is WE JUST DON'T KNOW

 

[S J H]

Cattle prices continue to rise in the live markets, yet deadweight prices are falling. The differential between Scottish beef and the rest of the country is at a low point according to AHDB, in an extract from their report below:-

Cattle trade direction of travel becomes clearer

In week ended 18 February the direction of the cattle trade became clearer. The GB all prime average price drifted down for the sixth consecutive week to 348.7p/kg. Easing just over half a penny on the week it meant that the measure has come back 5p since the start of the year.

While this drift from an overall GB price perspective is not particularly dramatic, a feature of the trade over the month has been the differentiation emerging between developments in Scotland and those in England and Wales. In England and Wales there is subtle downwards pressure on the trade while in Scotland, given high chill room stocks it is more intense and booking queues are lengthening. Steers meeting R4L specification in England and Wales averaged 359.5p/kg, down 6p since the turn of the year, while in Scotland at 362.9p/kg they have eased 8p/kg over the same time period. The differential between the two regions is now just 3p/kg, very narrow in a historical context.

Yet as reported on here we are seeing store cattle at eye watering prices.

Yet lamb/hogget price continues to weaken and again from their report this looks as if too much supply has just hit the markets:-

Higher supplies weigh on liveweight market

The liveweight lamb market has weakened in the past week following higher numbers of lambs coming forward.

In the week ended 22 February, the GB SQQ fell by 2p compared to the previous week, leaving the measure at 170.4p/kg. This means that prices have remained within 2p of the 170p/kg mark since the turn of the year. Despite the apparent price stability, given that the trade was moving up at this time last year, it means that the SQQ has now moved to be 15p lower than at the same point in 2016. This fall follows a higher number of lambs being sent to markets in the past week. Throughputs at GB auction markets were five per cent above the previous week and moved above 2016 levels for the first time this year, with numbers up nine per cent on last year. The trade was more subdued at the beginning of the period, with price falls towards the end of the Thursday to Wednesday week being slightly smaller. The GB SQQ on Wednesday 22 February was back 2p on the previous week.

Probably the greatest concern for the sheep producers is the low ewe price that is not helped by the large numbers of heavy hoggets at low prices.

Pig prices are much higher than a year ago, but as grain prices have risen, profitability will be falling and I presume the same is true of Chicken, however these have little influence on red meat values.

Not wishing to be unduly pessimistic but I am struggling to see what will turn around these falling prices in both cattle and sheep.
It is very unlikely that the pound will fall further against the euro when Article 50 is triggered and there is a possibility that it may strengthen as economic figures are improving and once again we have inflation in most things except livestock production.

It has only been the weakness of sterling that has protected us up until now.
Where next for prices?

I don't want to turn this into a brexit thread, but didn't you say that you couldn't understand why any sheep farmer would vote out?

 

[Tim W]

It has only been the weakness of sterling that has protected us up until now.
Where next for prices?

Over the next 5 years?
Downwards is the answer---I think that domestic demands for red meat (particularly lamb) will fall and that import availability will become greater
Export markets may develop but this depends on so many unpredictables that a forecast is very difficult
I don't know the beef market well enough but if you can't produce an in spec lamb for £60 (without SFP) then you will struggle

As you can tell I've got my ''positive hat '' on this morning !

 

[gone up the hill]

Over the next 5 years?
Downwards is the answer---I think that domestic demands for red meat (particularly lamb) will fall and that import availability will become greater
Export markets may develop but this depends on so many unpredictables that a forecast is very difficult
I don't know the beef market well enough but if you can't produce an in spec lamb for £60 (without SFP) then you will struggle

As you can tell I've got my ''positive hat '' on this morning !

No one can produce an in spec lamb on the hook for £60 let alone leave a profit margin subs or no subs!

Reality is that the sheep trade should be much stronger currently given the exchange rate, doesn't add up why this isn't the case.

Beef will be better than sheep for the next 5/10 years imo as the numbers in the UK just aren't about, thou of course this will depend on trade deals post brexit especially with American beef and if hormone treated beed is allowed into the UK then the only way we will be able to compete is if we can use the same hormone's in our cattle.

Don't see any issue with Scots beef now being near enough on parity with beef this side of the wall as there has never been a reason for it to be more expensive in the first place!

Reality is thou that farm gate prices aren't keeping up with inflation yet farm inputs are keeping up with inflation and sooner or later something somewhere will have to give unless this changes.

 

[S J H]

No one can produce an in spec lamb on the hook for £60 let alone leave a profit margin subs or no subs!

Reality is that the sheep trade should be much stronger currently given the exchange rate, doesn't add up why this isn't the case.

Beef will be better than sheep for the next 5/10 years imo as the numbers in the UK just aren't about, thou of course this will depend on trade deals post brexit especially with American beef and if hormone treated beed is allowed into the UK then the only way we will be able to compete is if we can use the same hormone's in our cattle.

Don't see any issue with Scots beef now being near enough on parity with beef this side of the wall as there has never been a reason for it to be more expensive in the first place!

Reality is thou that farm gate prices aren't keeping up with inflation yet farm inputs are keeping up with inflation and sooner or later something somewhere will have to give unless this changes.

It's dearer because they've marketed it well @gone up the hill we could be doing the same with red tractor, but people keep moaning about having to worm the dog.

 

[gone up the hill]

It's dearer because they've marketed it well @gone up the hill we could be doing the same with red tractor, but people keep moaning about having to worm the dog.

I don't think worming the dog has anything to do with it, the reality is that nearly all farmers think that RT is a complete and utter waste of time because its not being marketed properly ( or rather at all ) and is instead just another layer of red tape/ cost and is being used as a blunt method of having more control over us ( which the latter is basically the case )

If the RT logo etc was being properly marketed/ used as a brand and 99% of the shoppers knew the brand/ what the logo stood for etc and it increased sales then most farmers would get behind it.

 

[romneymarsh]

I don't think worming the dog has anything to do with it, the reality is that nearly all farmers think that RT is a complete and utter waste of time because its not being marketed properly ( or rather at all ) and is instead just another layer of red tape/ cost and is being used as a blunt method of having more control over us ( which the latter is basically the case )

If the RT logo etc was being properly marketed/ used as a brand and 99% of the shoppers knew the brand/ what the logo stood for etc and it increased sales then most farmers would get behind it.

Multiple retailers don't really like RT as it detracts from their own brand identity. The stronger it gets the more they would resist it IMO.

 

[gatepost]

Although I don't think the trade has been a disaster, Not encouraging, the heavy over wt hoggets subduing the ewe trade is an interesting point, especially as the law of diminishing returns will apply to most of them. Looking at Uk lamb on several supermarket shelves recently wasn't encouraging either from a quality or value point of view, I certainly would not have bought any of it so why should the consumer?

 

[Tim W]

No one can produce an in spec lamb on the hook for £60 let alone leave a profit margin subs or no subs![/QUOTE

Plenty will ---maybe not that many in UK under present systems and with current mindsets but it's a global market ???

 

[S J H]

I don't think worming the dog has anything to do with it, the reality is that nearly all farmers think that RT is a complete and utter waste of time because its not being marketed properly ( or rather at all ) and is instead just another layer of red tape/ cost and is being used as a blunt method of having more control over us ( which the latter is basically the case )

If the RT logo etc was being properly marketed/ used as a brand and 99% of the shoppers knew the brand/ what the logo stood for etc and it increased sales then most farmers would get behind it.

But what's the alternative? If more of us got behind it, rather than criticising, then we could make more of it.

I don't think I had to change anything here to get red tractor assurance. It's another cost, but I don't see it as red tape.

 

[JP1]

But what's the alternative? If more of us got behind it, rather than criticising, then we could make more of it.

I don't think I had to change anything here to get red tractor assurance. It's another cost, but I don't see it as red tape.

Quite right. If anything it's not rigorous enough and therefore just becomes "industry standard"

 

[GTB]

The ONLY good thing to come out of red tractor/farm assurance is the fact that someone comes around once every 12/18 months to check your records. Better to fail an FA inspection than an RPA/RPW one. Otherwise it's a total waste of time because it's not marketed correctly, the supermarkets don't want it and neither does the end customer.

 

[Henarar]

But what's the alternative?

Post Brexit sell it as English or Welsh and do away with the money grabbing, blackmailing parasites and those in our NFU that support it

 

[Henarar]

Multiple retailers don't really like RT as it detracts from their own brand identity. The stronger it gets the more they would resist it IMO.

RT has been around long enough now that the supermarkets should all be asking to use it because they can't sell without it because the customers will not buy without it
The truth is that the customers don't know or don't care about RT so the supermarkets are not bothered about using it
Because RT spends all its time screwing the farmers that pay for it and no time selling the brand to the public, its a farmer funded f**k up all supported by the NFU

 

[Henarar]

But what's the alternative? If more of us got behind it, rather than criticising, then we could make more of it.

I don't think I had to change anything here to get red tractor assurance. It's another cost, but I don't see it as red tape.

Quite right. If anything it's not rigorous enough and therefore just becomes "industry standard"

nart wrong with that if SJH was doing the job right then why the need for change, RT proves nothing, its a paper pushing excessive making up crap the night before the inspection

 

[tinsheet]

Selling fat lambs at Cutcombe, the buyers regularly ask if the lambs are assured!


After they have bought them!

Just saying.

No I'm not assured gave it up 2 years ago, made no difference to my sales.
(That I can see).
One less bill to worry about one day less wasted doffing my cap.

 

[JP1]

Selling fat lambs at Cutcombe, the buyers regularly ask if the lambs are assured!


After they have bought them!

Just saying.

No I'm not assured gave it up 2 years ago, made no difference to my sales.
(That I can see).
One less bill to worry about one day less wasted doffing my cap.

The trouble is the cartels that force you or lose half value on a cull cow for example

 

[Coximus]

Why cant anyone produce an inspec lamb for 60 quid?
I produce R3L + at 19kg dead for between 18-40 depending on if Im paying stupid rent (100/ac) and if Im feeding bales - Ideally Id feed all grass, but sometimes fields flood or it snows. That adds 40quid a day to my costs and is spread over lambs.
My costs include my labour @ 12.50/hour which IMO is very low anyway..

Ditch the bloody mules and texels, unless they are proven measured texels.
Why Chase the EU carcase? doubling your costs but only geting 5-10 extra a lamb, for way more work and input.
Increase numbers of good R3 lambs and cut losses, cut expenses, and keep healthier sheep.