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Cull cow prices continue to strengthen amid tight supplies
Tuesday, 30 March 2021
Cull cow prices have continued to rally this year. In the week ending 20 March, the overall cow price averaged 267.6p/kg, nearly 40p more than the five-year average. While prices typically rise in the first half of the year, prices this year have risen far more quickly than can usually be expected.
Tight supplies for prime animals have supported prices for all cattle, and reports suggest that processors are very keen for animals to come forward. Despite this strength in prices, throughputs in the first two months of the year were 3.5% lower than in 2020, at 106,600 head, suggesting that there may be a limit as to how many cows the price can draw out. As at the 1 January, the number if dairy and beef cows over 30 months of age both contracted by 2% year-on-year. As such, supplies of cull cows are likely to be tight.
However, feed markets are expected to remain strong in the coming months. While GB milk prices are expected to increase by around half a penny by the spring, it will be interesting to see whether the expected rise in prices will be able to mitigate potential further rises in feed costs. Historically, we have seen that there is a relationship between feed prices and milk production, albeit not necessarily a clear cut one. As such, it will be interesting to see over the next couple of months if both cull prices and feed markets remain strong, if more cows potentially come forward. Of course, this will be highly dependent on how the grass growing season progresses.
As well as receiving support from prime cattle prices, cow prices are also perhaps being influenced by the planned reopening of some hospitality in April. This could boost demand for manufacturing beef, although it remains to be seen exactly how changes to lockdown measures will influence beef demand overall in the coming weeks. This will depend on how quickly and confidently people go back out to eat, although no doubt there will be plenty of barbeques and family reunions in the coming weeks.
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