Irish factory prices last week closed the gap with Britain to 14c/kg on R3 steers, the lowest it has been since January 2012. These are prices reported by Bord Bia, net of VAT.
This is driven by strong performance in international markets, some of which the UK doesn’t have access to, and the strengthening of the euro against sterling to 87p = €1. Manufacturing beef, which accounts for half the carcase, is particularly in demand across the world. This is usually taken from the forequarter plus trimmings from hindquarter cuts and used in burgers or mince.
This, combined with a good steak meat market in Britain and the continent, has created a strong demand for cattle of all types.
Regional differences narrowing
In Ireland, prices have been on the rise since the beginning of March and in the last week of May were showing a 33c/kg increase on the R3 grade steer. At €4.06/kg, this puts Irish R3 steer price within 14c/kg of Britain, where the price was at the equivalent of €4.20/kg last week.
The price gap between Northern Ireland and Britain has all but disappeared, with NI R3 steers reported at the equivalent of €4.18/kg for the same week. Scotland remains the top-performing area of the UK on £3.77/kg, which is the equivalent of €4.33/kg
Exchange rate
Unlike this time last year, when Irish prices collapsed with the weakening of sterling after the UK's Brexit referendum, the steady climb of the euro against sterling has been absorbed, with Irish factory prices continuing to creep up. Irish prices also compare favourably with those in the rest of the eurozone, which is Ireland’s main export market after the UK.
In France, R3 young bull prices were €3.74/kg in the last week of May, while Germany was on €3.64/kg. Spain returned €3.77/kg for R3 young bulls while the best-performing market in the EU, though with small numbers, is Sweden, which paid the equivalent of €4.12/kg in the last week of May for R3 young bulls.
US strong, Australia and Brazil falling back
Internationally the US remains strong on the equivalent of €4.10/kg, while prices continue to slip in Australia from record highs earlier in the year to the equivalent of €3.48 for cattle comparable with R3 steers.
The effect of Operation Weak Flesh in March and recent events involving JBS are now being really felt in Brazil. Prices for cattle comparable to R3 steers were back to €2.17/kg, which is down 36c/kg on the 2017 average.
Cow prices
Irish factory cow prices are also buoyant. In the last week of May, O3 cows were making €3.37/kg at the factories, while the equivalent price in Britain was €3.13/kg. France, which along with Ireland dominated the EU cow trade, was on €3.27/kg while Germany was returning €3.10/kg for O3 cows.
There is then a gap back to the Netherlands, where O3 cows were making €2.79/kg, and Spain, where €2.20/kg was paid. Sweden is also an outlier for cows, on the equivalent of €4.12/kg. Internationally comparable cows were making the equivalent of €2.34/kg in the US and €2.92/kg in Australia.
Will it last?
Irish farmers will wonder whether the recent relatively good run in prices can continue. Traditionally, they peak this time of year when we are between housed cattle and the first cattle finished off grass.
As the summer progresses and more grass cattle come out, prices fall. When the weekly kill climbs towards 35,000, the pressure comes on.
What is different this year is that the beef trade has been good and factory stocks are low. For the past couple of years, factories said the market price returned didn’t justify the price they paid for cattle. That hasn’t been the case this year.