British prime cattle market falls

The value of the prime cattle market in Britain fell by £15m in the year to February 2016, according to the Agriculture & Horticulture Development Board’s (AHDB) Beef & Lamb division. 

In a new report, the organisation said the principle reason for the decline was due to a fall in the base price paid for cattle meeting target specification.

The same analysis indicated that 84% of the loss of value – equal to £12.6 million – was because of the fall in base price. This decline resulted in just under 30p/kg for steers and heifers, with a slightly smaller fall for young bulls.

Furthermore, a decrease in the number of cattle slaughtered, in particular heifers, was also a significant factor. This was, however, partially offset by a rise in average carcase weights and a small improvement in carcase quality.

“The analysis emphasises the importance of producers understanding and responding to processor requirements,” said Stephen Howarth, market specialist manager for AHDB Market Intelligence.

“This is particularly pertinent in a falling market, where delivering the right kind of animals will minimise any loss of value.”

After these above mentioned derogatory factors are taken into account, the report showed that there was still a loss of roughly £1m due to changes in prices between different parts of the conformation/fat class grid relative to the base price.

According to AHDB Beef & Lamb, the average price for R4L steers declined by 28.9p/kg between February 2015 and February 2016, while prices for other classifications fell more significantly. This is reflective of the changes to the bonuses and penalties paid by some processors, either based on carcase classification or on other factors such as carcase weight.

“As specifications have tightened and penalties for missing target ranges increased, it appears that some producers have not responded to these market signals, contributing to the reduction in the value of the GB prime cattle market over the period,” continued Howarth.

“These findings reinforce the importance of producers keeping in close touch with market developments in order to understand and anticipate changing requirements. This in turn will enable them to maximise their returns.”

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