Livestock producers are bearing the brunt of inflated input costs, but strong cull cow prices offer opportunities to make some gains ahead of the breeding season.

Average cull cow prices reached 184.20p/kg and cull bulls 193.70p/kg in the week ending May 14, according to QMS – up more than 20% on last year.

Strong global demand for beef is underpinning this, say analysts, possibly fuelled by people eating out again more and higher demand for cheaper cuts.

As we approach the breeding season, strong cull cow prices offer opportunities for both buyers and sellers ringside, says Neil Wilson, executive director of the Institute of Auctioneers and Appraisers in Scotland (IAAS).

“With tightening margins and the need to keep on top of costs during this time, it’s really important not to be carrying passengers – i.e. underperforming cows,” he says.

“Cull cow prices are very good right now, and the gap between these and younger stock has narrowed, so it’s worthwhile considering the option to trade in the value of older cows and replace them with younger stock as we approach the breeding season. This is a win-win for both buyers and sellers.

“As ever, since marts are part of a flexible selling system with transparent pricing, farmers can look at the latest prices and decide on the day to sell. This gives flexibility to make business decisions based on things like farm performance and the amount of grass available. There’s no better system for selling livestock.”

Record prices for beef finished cull cows were smashed last week at Thainstone, May, 19, when a 1000kg Limousin, and a 928kg Limousin, both reached £2580, with this category averaging £1610 across 167 animals.

Dairy cows averaged £909.25 and sold to £1570 for a 864kg Friesian, while cull bulls averaged £2053.20 and sold to £2880 for a 1380kg Charolais.

“We’ve had a busy spring season at ANM,” says Alan Hutcheon, director, Aberdeen and Northern Marts, at Thainstone.

“Speaking to farmers, in general, everyone is happy with the prices they’re getting, cull cows and cull bulls in particular, which are seeing fantastic prices. We’re not seeing farmers bring prime stock forward earlier, but perhaps a few cull cows as there is a cost to feeding them.

However, despite the strong prices, Mr Hutcheon says farmers are still concerned.

“The biggest concern for farmers right now is fuel and fertiliser prices. But it’s the cost coming down the line that’s concerning them – it’s the unknown.

“The biggest thing we do to help is that we pay on the day – that’s a huge selling point of marts. Transparency is really important, but right now what’s most important to farmers is that they can take their cattle to market and get paid the same day. Support your mart to keep the live ring busy and buzzing,” says Mr Hutcheon.

Jim Craig, managing director at Craig Wilson Livestock Auctioneers at Ayr, agrees, adding; “The cost of inputs is the biggest issue facing our customers right now. At the Ayr County Show, there were lots of people talking about it. Having said that, folks are working away as usual.

“The weather is having the greatest impact on some farms though, being very dry in certain areas, but very wet in others.”

Facing mounting costs also from ferry breakdowns and higher fuel prices, farmers on the islands are feeling the pinch but remaining patient.

“It feels like farmers on the islands have the cost of inputs in the back of their minds, but they’re waiting to see what happens,” says auctioneer, James Scott, at United Auctions.

However, Donald Young, president of the Institute of Auctioneers and Appraisers and group director at United Auctions, Stirling, says he is seeing farmers start to react to high input costs.

“Producers are keeping going, but edging back,” says Mr Young. “For example, rather than having 100 cattle on grass, maybe they’re keeping 70.

“Looking ahead, well no one really knows what’s going to happen as everything is so uncertain. The world price of grain though has never been anywhere near like this. So, the cost of finishing animals has more than doubled – and that then affects what people can pay for stores.

“The marts have never been more important. When the world is so uncertain as it is now, marts offer transparency in the whole system. People are still going to market and bidding, and prices have stayed level.

“We’re continuing to do what we can to support our customers at this time, and make sure that they are still in the industry at the end of the day.”

Record farm gate prices have been seen across large parts of the world this year, resulting in a more competitive global marketplace, says Iain MacDonald, QMS senior economics analyst.

“The EU beef market has been particularly strong since the second half of 2021, without any obvious market signals, such as a sharp fall in beef production or a large shift in its trade balance. As a result, it points to firm demand being the driver, possibly as the economy reopens and people begin to eat out more often again.”

While overall EU beef production has been relatively flat, cow beef production did slip back in early 2022, creating additional momentum to cull cow values, says Mr MacDonald.

“As a result, it will currently be more challenging for traders to find cheap beef to import to Britain, while supporting EU demand for exports. It will also have underpinned values in price sensitive segments of the domestic market, particularly in food manufacturing and catering.”

Current market circumstances are, he says, giving ‘an extra boost’ to products which might normally face softer demand.