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Cause for optimism as cattle prices firm.

Surplus purebred dairy bulls from this autumn's calving season look set to make a positive contribution to English herd profitability once again as dairy beef prospects recover encouragingly, reveal the latest English Beef & Lamb Executive (Eblex) projections.

At a current average of around 185p/kg deadweight, returns from typical ( O3 dairy bulls are nearly 25p/kg higher than this time last year and fully 45p/kg up on conservative projections of last autumn, allowing for the possibility of market disruptions from the OTM rule change.

Dairy cull cow prices have fallen back recently, almost certainly reflecting increased disposals of poor quality cows to preserve drought-affected forage stocks coupled with reduced domestic manufacturing beef demand in the hot weather and holiday season.

The return of more than 150,000 cows and more than 45,000 tonnes of cow beef to the domestic food chain since the OTM rule change has been achieved remarkably seamlessly.

At the same time, finished cattle prices in general and young bull prices in particular have firmed very considerably across the country, even before much contribution from exports.

This and the fact the UK export market for both prime and cow beef is developing steadily, with an estimated 900 tonnes now being traded from the UK every week (more than 600 tonnes from England), gives real cause for optimism.

As does notably strong demand and excellent feedback from key European bull beef markets such as Italy even before major volume buyers have become fully involved.

The continuing shortage of manufacturing grade beef across the UK and European Union bodes particularly well for both dairy bull and cow beef prices over the coming year. All the more so, given continuing limitations to South American beef supplies and projected decline in beef production across Europe due to decoupling.

Taking into account these factors, Eblex projections for Holstein bulls finished at 12 months of age in 2007 suggest they could earn nearly pounds 520/head. Even allowing for a virtual doubling of the reared calf cost to pounds 140/head and reasonable increases in feed and other variable costs, gross margins of over pounds 100/head seem achievable.
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Publication:The Journal (Newcastle, England)
Date:Aug 7, 2006
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