Supermarket demand continues to underpin beef prices despite weak pound

Boris Johnson’s proposal to make far-reaching changes to the Brexit agreement reached last year with the EU saw the UK pound weaken dramatically on international money markets last week.

Having started the week at 90p to the euro, it finished on Friday at 94p. Not since the start of the Covid crisis in March has the pound weakened so dramatically.

Given the uncertainty surrounding the British position and the considerable forces aligning against the Prime Minister within the UK political system, Boris Johnson’s brinkmanship policy could yet jeopardise his own position.

On that basis, it’s probably more prudent for those with cattle to sell to concentrate on getting their own business done in an orderly fashion in the next few weeks rather than trying to second-guess the political market.

While the expectation is that beef prices here may be affected by the weakening sterling, that hadn’t happened as we turned into this week.

I was told by one midlands agent that his instructions last week were to bring forward as many cattle as possible for killing this week. The thinking behind this seems to be that while the British government appears to want trading uncertainty, British supermarkets definitely do not.

The British supermarket chains want to avoid any potential shortages so they are forward-buying and storing supplies as a hedge against a no-deal Brexit and threat of more stringent Covid restrictions.

This all means the general factory price situation is stable, with bullocks and heifers continuing on a base of €3.60/kg, despite the weekly kill rising another 261 to 36,260 during the first week of September.

Cull cow prices are edging upwards, with reports of up to €3.40/kg given for full loads of R-grades last week. O-grades also edge up, with most getting €3.00-3.10/kg, while better P-grades are now operating from €3.00-2.90/kg.

Bull numbers remain low, with just 1,264 going through the system during the first week of this month, while quotes appear stuck on €3.60/kg for U-grades, €3.50 for Rs and Os on €3.40/kg.

Meanwhile, the role of Irish women in the economy has greatly expanded in recent years. It’s an expansion that caused a dairy farmer neighbour of mine to speculate about the effect of off-farm incomes on dairy and beef prices.

“If your wife’s income pays for house and family expenses it means co-ops and meat plants can squeeze the price they pay for milk and cattle because they know your wife’s income will mean the family wouldn’t actually go hungry,” he claimed.

“Only for the women’s money coming in, whole swathes of the country wouldn’t be farming at all.”

While this theory might be an exaggeration and somewhat controversial, I believe there is kernel of truth to it. Let’s be honest: how many farmers can rear and educate a family on the strength of their farming income alone?