Rosch

Beef market trends- South Africa July 2019

US beef prices were mixed this week. Price for rump increased by 1.2% and chuck declined by 1.9% for the week.

Week-on-week prices for topside
declined by 0.1% and brisket rose by 0.5%. Strip loin prices declined by 1.3% compared to prices a week ago. Red meat exports from Australia for the year, hit their 2nd best performance financially in 2018/19 driven by a strong global demand. Australian beef exports increased 7% year-on-year, lamb and mutton exports increased 2% and 17% respectively. Beef catle export values were supported by the Australian dollar trading at a 10-year low and the drought in key producing regions which elevated sheep and cattle slaughter rates. US Grain trade is creating a lot of uncertainty in the US feeder market. The US cattle futures prices traded mixed driven by a drop in US maize and soybean prices and forecasts of cooler weather in the US Midwest, which eased concerns around US maize and soybean crop yield losses.

Beef: Prices in the domestic beef market traded mostly positive this week. The price of class C beef remained stable week-on-week while the
price for class A increased by 1.7% and weaner calves decreased by 2.4% compared to last week's prices. Demand for beef remains low with
customers still under pressure financially. Compared to a year ago, prices for class A and weaner calves are lower by 2.9% and 21.1%
respectively. High local maize prices are suppressing weaner prices. The import parity for beef, according to AMIE, is 0.5% higher compared to
last week. The number of animals slaughtered this week, according to RMAA, amounts to 10,153 which is 28.6% lower compared to last year.
Mutton: Locally the sheep meat market traded lower this week, the price of class A declined by 1.9% week-on-week and the price for class C
decreased by 2.1% week-on-week. The price for feeder lambs declined by 1.1% week-on-week. Lamb prices remain high in comparison to
other protein alternatives. Due to consumer spending constraints, demand remains limited. The number of animals slaughtered this week was
10,028 according to RMAA . This is a 33% decreased year-on-year. The price of Merino skins increased by 0.9% from R36.00/skin to
R36.33/skin week-on-week, this price is 62.48% lower compared to prices a year ago. The price of Dorper skins increased 3.3% from
R25.00/skin to R25.83/skin week-on-week, which is 36.32% lower year-on-year.
Pork: The US market remains hopeful, but there’s no clear signs yet for an increased demand for American pork from China (the world’s
largest pork importer). Bulgaria has a new case of ASF. US Market is still awaiting new US-China trade talks, a resolution would lift the US
livestock complex as a whole. Locally: In the domestic pork market the price for porkers decreased by 0.8% while the price of baconers
declined by only 0.19% week-on-week. Compared to a year ago, current prices are 16.7% higher for the pork average contract price, 14.9%
higher for porkers and 18.7% higher for baconers. The domestic pork market is expected to continue along an increasing trend for the next three months.
Poultry: Prices in the domestic poultry market increased marginally this week. Local poultry prices are expected to remain steady. High local
maize prices continue to put pressure on the intensive livestock sector. The industry is hoping the month-end demand will support prices in the
next week. The market anticipates an increase in domestic poultry prices from November onwards till the festive season based on seasonal
trends.
Hides:The current hide price is 70.8% lower compared to prices a year ago. The hide market remains under pressure at this time, however
prices do appear to be stabilizing. Low demand and reduced consumer spending power are contributing factors to the low hide prices. Prices
are expected to remain steady at this level. Oversupply of hides in the global market coupled with weak international hide demand keeps the
hide market sentiment bearish. The market is expected to remain suppressed in the medium term.

Prices in the domestic beef market traded mostly positive this week. The price of class C beef remained stable week-on-week while the price for class A increased by 1.7%. Weaner calves decreased by 2.4% compared to last week's prices. Demand for beef remains low with customers remianing under pressure financially. Compared to a year ago prices for class A and weaner calves are lower by 2.9% and 21.1% respectively. High local maize prices are suppressing weaner prices.The import parity for beef, according to AMIE, is 0.5% higher compared to last week. The number of animals slaughtered this week, according to RMAA, amounts to 10,153 which is 28.6% lower compared to last year.

Globally,volatility in the US grains complex is expected to continue putting pressure on the US beef market. Locally, consumers remain under pressure, driving red meat demand levels down. The CEC released its latest crop estimate yesterday, estimating a higher local maize crop of 10.979 million tons. Although the increased supply hasn't yet reflected in the Safex prices; in the medium term it could potentially lower feed costs, which in turn can support weaner prices. According to seasonal trends, prices for class A, class C and weaner cattle are expected to follow a slight declining trend over the next three months.

The New Zealand lamb market experienced positive price movements this week with a 1% increase in the lamb price and the ewe price remained stable. Australian sheep meat exports performed the strongest on record with lamb shipments reaching 275,000 tons and mutton 188,000 tons. The ongoing widespread drought and high slaughter rates were the primary driver of increased exports. Supply is expected to remain low throughout winter and into early spring. New Zealand farmgate lamb and mutton prices have skyrocketed, however supply is not nearly enough. New Zealand analysts expect to see an improvement in this season’s slaughter rates during September and October, but for now the NZ export lamb slaughter number is 6- 7% below last year’s level.

Locally the sheep meat market traded lower this week, the price of class A declined by 1.9% week-on-week and the price for class C decreased by 2.1% week-on-week. The price for feeder lambs declined by 1.1% week-on-week. Lamb prices remain high in comparison to other protein alternatives. Due to consumer spending constraints, demand remains limited. The number of animals slaughtered this week was 10,028 according to RMAA . This is a 33% decrease year-on-year. The price of Merino skins increased by 0.9% from R36.00/skin to R36.33/skin week-on-week, this price is 62.48% lower compared to prices a year ago. The price of Dorper skins increased 3.3% from R25.00/skin to R25.83/skin week-on-week, which is 36.32% lower yearon- year.

The US pork market traded marginally positive this week with the US pork carcass price increasing by 5.5% week-on-week. Prices for pork loin and ham increased by 0.5% and 10.1% respectively. The rib price decreased by 1.1% compared to prices a week ago. The US import parity for pork ribs declined by 2.0% and import parity for ham increased 6% week-on-week. Increased purchases of US pork from China would help alleviate some of the build-up of US pork inventories. The US market remains hopeful, but there’s no clear signs yet for increased demand for American pork from China (the world’s largest pork importer). Bulgaria has a new case of ASF. The US Market IS still awaiting new US-China trade talks, a resolution would lift the US livestock complex as a whole.

In the domestic pork market the price for porkers decreased by 0.8% while the price of baconers declined by only 0.19% week-on-week. Compared to a year ago, current prices are 16.7% higher for pork average contract price, 14.9% higher for porkers and 18.7% higher for baconers. The number of animals slaughtered this week, according to RMAA, is 2.4% higher than last week.

The US market remains hopeful, but there’s no clear signs yet for increased demand for American pork from China (the world’s largest pork importer). Bulgaria has a new case of ASF. The US market still awaiting new US-China trade talks, a resolution would lift the US livestock complex as a whole. The domestic pork market is expected to continue along an increasing trend for the next three months.

This week the price for US whole birds decreased by 7.2% compared to last week and the price of chicken breasts declined by 9.8% week-on-week. Chicken prices are surging in China as consumers shift to poultry as a cheaper alternative to pork amid the ASF outbreak. Chinese poultry analysts caution that they are not as hopeful for the market because feed costs and day-old chick costs are soaring. The price for fresh MDM increased by 0.2% week-on-week and the price for frozen MDM remained stable compared to last week. The price for US leg quarters declined by 0.8% and the price for EU leg quarters increased by 3% week-on-week.

Prices in the domestic poultry market increased marginally this week. The price of fresh whole birds increased by 0.3%, the price of frozen whole birds increased by 0.5% and Individually Quick Frozen chicken prices increased by 0.1% week-on-week. Current prices of frozen whole birds are 7.3% higher compared to prices a year ago, current IQF prices are 1.8% higher year on year. The import parity for whole birds and chicken breasts declined compared to last week by 5.7% and 9.4% respectively. The number of day-old chicks in the market is currently low. Market expects through-put to be low in August. In the very short term, we anticipate month-end demand to stimulate an increase in prices.

The domestic hide market traded marginally negative this week with a 0.1% decrease from R1.707/kg to R1.705/kg in the calculated average hide price.

The current hide price is 70.8% lower compared to prices a year ago. The hide market remains under pressure at this time, however prices do appear to be stabilizing. Low demand and reduced consumer spending power are contributing factors to the low hide prices. Prices are expected to remain steady at this level. Oversupply of hides in the global market coupled with weak international hide demand keeps the hide market sentiment bearish. The market is expected to remain suppressed in the medium term.


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