How has the deadweight cattle price had an effect on the price of stores?

Friday, 31 January 2020

2019 was a year that the cattle industry is unlikely to remember too fondly. Deadweight prices started the year slightly below the previous year but fell almost continuously throughout the year. On average, prime deadweight prices were 8% lower in 2019 than in 2018.

But what effect does the deadweight price have on the cost of store animals?

The average annual price of rearing calves was considerably lower than in 2018 but the price of older store animals didn’t seem to follow the same trend. The price drops in bull and heifer calves dropped between 17% and 29%.

You would probably expect that the cost of a two-year-old steer to be the most closely related to the deadweight price, as it is likely that it would be finished within six months of purchase.  However, although the price of these store animals has fallen, it’s not by as much as the deadweight price has fallen.

Taking the continental crosses as an example shows that the store price doesn’t seem to be overly influenced by the deadweight price. In the last two months of 2019, the deadweight price did record price rises, increasing by 2% between October and December. However, the steer prices increased considerably more over the same period (8%). This will have put pressure on the profitability of many enterprises, in particular those weighted towards finishing cattle.

The cost of some inputs in 2019 have been lower, which could have partly offset losses for some.

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