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Last week’s beef kill recorded at 35,247 head and averaging 34,941 cattle processed for the last five weeks has left 2016 throughput on course to match the recent high kill of 2014.
Farmers will be well aware of the 2014 beef kill reaching 1.64m head in a year that experienced long delays in getting cattle booked in for slaughter, carcase weight limits being introduced, penalties imposed on cattle deemed out-of-spec and factory protests.
Prices have struggled with the higher numbers in the system in recent weeks, with the hope of a price rise for the Christmas trade now past.
The market has, however, handled the higher numbers better than in 2014, with no major backlog encountered in getting cattle booked in for slaughter and an average weekly kill of 31,806 head.
There is also no accumulation of beef in chill rooms reported. Another factor that is likely to be adding to firm demand is cattle being slaughtered at a lower carcase weight, reducing volume.
This stems from finishers moving continental cattle at a younger age and from increased supplies from the dairy herd, including a higher percentage of Angus and Hereford-sired cattle.
The average price of R3 steers in 2016 at €3.78/kg excluding VAT, as reported by Bord Bia, is running at 20c/kg behind average levels in 2015 and 8c/kg ahead of 2014 levels. Processors report trading being affected by Brexit and sharp fluctuations in the value of the euro to sterling lowering the value of exports to the UK.
A significant downside to trading in recent months has been Ireland losing its position of returning a price above the EU average and a widening in the differential between Irish and UK prices.
Figure 1 demonstrates the supply pattern over the last three years, while Figure 2 looks at the annual kill over the last decade. As can be seen, the 2016 kill varies with the 2014 kill, with throughput higher for the first 10 weeks of the year, lower from then until mid-year and by and large holding similar in the second half of the year.
To date, the kill is running 5,107 head behind 2014 levels and 77,676 head above the same period in 2015. If the kill holds steady for this week and next, it is likely it will match 2014 levels in the final week of the year.
The higher kill in 2016 compared to 2015 stems from higher young bull throughput and a higher cow kill with the steer and heifer kill likely to finish the year not too dissimilar.
The big challenge for the market is in 2017, with Bord Bia predicting potentially 100,000 to 120,000 extra cattle available for slaughter.
If this materialises, it will see the annual beef kill rise to in the region of 1.75m head, a level not witnessed since 2003 and 2004, when subsidies still influenced supply and the kill was 1.77m and 1.72m head respectively.
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