Press Release - Deadweight purchasing rule books are being torn up - List prices are no longer the buyers' bible

Deadweight purchasing rule books are being torn up. List prices are no longer the buyers’ bible.

The National Beef Association says demand for British beef, on both the domestic and export markets, is so strong that processors have torn up the rule book to make sure they can pull in the cattle they need to meet their orders.

Last week the hunger for in-specification prime stock hit unprecedented levels and many large companies instructed buyers to ignore list prices, usually set at the end of the week and pay “whatever is necessary” to fill their lairages instead.

This resulted in competing companies offering up to five pence a kilo more than had been agreed just a weekend earlier so they could be sure of meeting retail and export orders. 

Earlier this week Dovecote Park made the first-time move of emailing its regular suppliers offering to pay at least 5p, or about £20 a head, more for in-specification stock than the price listed last Friday by its main rivals.

“Dovecote Park is currently setting the pace in England with offers of a 332p base price for commercial specification cattle which compares well with the 327p listed just one working day earlier by its biggest competitors,” explained NBA chairman, Oisin Murnion.

“However it may just be a matter of time before it is gazumped by other frontline buyers, like Woodheads, because they too need cattle and will pay what it takes to make sure they get them.”

The Association is urging its members to be aware that prices are moving forward on a daily basis and should not be left behind, by asking too little, when completing a sale.

“The market is so hot there is a real risk of feeders underselling their stock because ex-farm prices are quickly galloping well ahead of the already outdated list price figure many still use as a marker,” said NBA Director, Kim Haywood.

“Finishers need to be confident about being able to demand more than the purchaser’s original offer so new price levels, which more accurately reflect the extraordinarily bullish conditions of the current prime cattle market, are constantly re-established.”

“Buyers have had the whip hand for a long time and have been able to nominate their base price for commercial R4L steers and heifers on a take it or leave it basis.”

“However over the last twelve weeks market prices have been lifting so rapidly that list prices are being ignored. Dovecote Park is also challenging other processors by offering a base of 360p for Angus cattle and many Scottish buyers will already be paying more than 335p to secure good loads of commercial stock.”

 “Our worry is that feeders who are used to buyers being in control will be pleased to accept a payment of 1-2p above the list price instead of checking out the market properly and demanding 4-5p more instead.”

“Some buyers might still puff and bluff when asked to pay more, but cattle are short and prices have been at record levels ever since they smashed through 300p at the end of February,” Mr Murnion added.

For more information contact:

Oisin Murnion, NBA Chairman. Tel: 07739 632048

Kim Haywood, NBA director.  Tel. 0131 336 1754/07967 698936