Good cows capable of producing heavy carcases and classifying 3 or 4L for fat cover may earn as much as 120-140p per dwkg from slaughter companies ready to process older beef during the week beginning November 7th, the National Beef Association said today.
And sellers with lighter, thinner cows should watch the trade carefully to see whether the OTMS, which will continue to offer around 87.4p before it comes to its expected end early in the New Year, or the open market, is their best sales option.
"The message from slaughterers keen to be among the first to handle cows born after July 1996 is that they will initially be looking for biggish animals likely to classify O+ or better in conformation and will be waiting to see how the commercial market for thinner, lighter cows develops before they commit themselves," explained NBA chief executive, Robert Forster.
"This almost certainly means that dairy cows likely to attract early business interest will be special types that have been fed before being presented."
"And the owners of suckler cows that are below average weight, have been culled because of their poor condition score, or show obvious signs in the hindquarter, or across its back, of Holstein breeding should study the way prices are moving before deciding either to use the OTMS or take advantage of the market."
The NBA is also warning prospective sellers to take account of the impact on the net return from commercial cows of abattoir deductions, commissions and other offtakes that animals put through the OTMS avoid.
"The most obvious of these is the result of carcase dressing on the payable weight. Payment on carcases moving through the OTMS is calculated after the head, hide, feet and tail are removed," said Mr Forster.
"However commercial carcases will be subject to further trimming. The actual specification has still to be agreed between farmers' representatives, the trade, and government but the drop in net weight could be substantial and we have been advised that a commercial cow may have to make 97p-99p off the market to earn the equivalent in net terms of a similar cow put through the OTMS at 87.4p."
Nevertheless the Association has been told something like 80,000 cows could be slaughtered commercially over the seven weeks before the end of the trading year.
"If the right types of cow are offered and there is not a rush to sell obviously inadequate animals while the new market for older beef is finding its feet the results could be relatively pleasant for everyone," said Mr Forster.
"It is clear that good cows will be wanted from day one but no one yet knows when demand for lighter cows will kick in and they start making more than they would if they were put through the OTMS.
"Vendors should also note that the orderly presentation of both commercial and OTMS cows requires planning. The first will benefit from proper selection and feeding and the second will have to be booked in early or their owners will be disappointed."
"Rendering capacity for OTMS and commercial slaughter bi-products is likely to be 23 per cent, or the equivalent of 6,000 OTM cows a week, lower this year than it was last."
"It therefore makes sense to make sure that the heaviest pre-August 1996 culls go through the OTMS while it is still available, the lightest are kept for the OCDS in January if they will benefit from the flat rate payment, and any post-July 1996 cow that will respond to feeding is held back so it can be sold commercially when the trade for older beef gathers pace after the New Year," Mr Forster added.