Beef falls to floor level

Press, 15 March 1980, Page 3

Beef falls to floor level

The beef market has fallen to the point where farmers will receive for manufacturing ox, heifer and cow beef, floor or minimum prices on Monday. This is the effect of a further 8.5 c a kilogram drop in the price for this class of beef, after a decline of 7.5 c in the last two weeks. This contrasts with last season, when large slices were skimnied off producers returns to go into the beef stabilisation account after prices exceeded the trigger price levels then in force. Prices have also been reduced again for all other classes of beef by 10c a kilogram. In the last two weeks prices for prime beef grades have dropped 18.5 c and for bull beef, 20.5 c. According to an industry representative, a bigger drop in the prices for manufacturing beef could probably have been justified. The decline in beef prices is a reflection _ of price movements on the United States marke- . The c.i.f. .price for cow beef in the United States is now about USll6c a lb compared with 121 c a week ago and 134.5 c about three weeks ago. Over the last year prices have fluctuated and. the peak reached ; last season was when the price was 147 c. About Christmas it was 141 c. Industry sources are not sure that .the market has "‘bottomed out” yet and

prices may go lower. j A big factor in the present situation is believed to be the high cos., of borrowed money.. In the last month the prime interest rate of banks in the United States has risen from 15| to 18| per cent and many are having to pay more. The cost of financing a container of beef containing 16 tonnes, worth about SUS4I,OOO, is now about $3O a day. The effects of this are being felt right through the American industry and people tend to buy on a more hand-to-mouth basis. Attractively priced pork and chicken, are being produced in increased quantities, taking up the shortfall in beef supplies. Super* markets have pushed these alternative products, and they could become even more competitive as a result of the. United ■ States’■-.em-bargo on gm in exports to the .Soviet Union. £, The greater availability of

grain in the United States has caused pork and chicken producers to accept lower prices in the expectation that prices could be lower later, when the volume of product could also be bigger. It is probably as well, according to industry sources, that the supply of beef is dropping in New Zealand. One large company’s kill is down about 26 per cent on last season, when it was also down on the previous season. There had been some indications that the Soviet Union might also come into the market in New Zealand for beef, but these do not seem to have materialised. Soviet interest in mutton has also waned with the prospect of bigger kills of stock in Russia because of reduced supplies of grain from the United States to carry them on. Other changes in prices to farmers for stock killed for export include a 2.5 c a kg drop in the price for the,

MH2 grade of mutton, a 3c a kg rise for the cutter; grades of lamb and a 15c drop in prices for sheepskins reflecting an easing in pelt values. The new meat prices are:— Beef x Ox — Pl: 5c to 121.5 c per kg. G: 107.5 c to 117.5 c. LI: 110.5 c to 119.5 c/ L2: 110.5 c to 114.5 c. M: 97c to 106 c. : 107.5 c to 111.5 c. E: 100 c to 104 c. Heifer — Pl: 107.5 c. G: 103.5 c to 113.5 c. LI: 108.5 c to 113.5 c. L2: 108.5 c to 113.5 c. M: 97c to 106 c. T: 105.5 c to 109.5 c. E: 98c to 102 c. Cow — LI: 91c to 101 c. G: 89c to 99c. M: 97c to 106 c. T: 92c to 96c. E: 79.5 c to 83.5 c. Bull —119.5 c to 138.5 c. Lamb Cutters — CIL, up to 12.5 kg, 54.2 c per kg; CIM, over 12.5 kg, 59.2 c; C2, all weights, 46.3 c. Sheep MH2, 30.5 to 36kg, 17.5 c.