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African Swine Fever hits fourth province of South Africa

The US beef market traded negatively this week with prices for topside, rump and striploin declining by 3.4%, 5.8% and 1% respectively.

The price for brisket increased by 0.8% while the chuck price remained the same as last week. The New Zealand beef market remained stable this week, the current steer price is exactly the same as it was both a month and a year ago. There are concerns that the US beef market will not be able to recover before the Summer season with the downward momentum building as May prices usually set the tone for the rest of the Summer trading. The US slaughtering numbers are at a seven-year high with an average of 670,000 cattle slaughtered a week in early May.

Beef: There are concerns that the US beef market will not be able to recover before the Summer season with the downward momentum
building as May prices usually set the tone for the rest of the Summer trading. The US slaughtering numbers are at a seven-year high with an
average of 670,000 cattle slaughtered a week in early May. Week-on-week in the domestic beef market, class A prices traded down by 0.1%,
class C prices traded up by 0.3% and weaner cattle traded down by 2.1%.
Mutton: The price for New Zealand lamb increased week-on-week by 0.7%; the price for mutton ribs increased by 7% compared to a week
ago, this is due to continued strong demand following the Easter period, Chinese demand for mutton is also high. The domestic market moved
upwards week-on-week with an increase in the price of class A (2.2% up), class C (0.9% up) and feeder lambs (5.3% up); the current prices
are lower than prices a year ago
Pork: The US pork market traded positively overall this week with large amounts of volatility during the week. An index of US bacon prices
has been created which will provide transparency regarding the volatility of the pork market as bacon is the part of the pig that is most volatile
with respect to prices. The domestic pork market traded downwards this week with porker prices down 1% and baconer prices down 1.1%.
African Swine Fever has hit a fourth province as infected animals were found on a farm in Heilbron in the Free State.
Poultry: The US poultry industry had a mixed week this week with the price of whole birds and leg quarters increasing by 1.1% and 3.2%
respectively while the price of breasts declined by 2,6%. The expected increased demand for protein due to the outbreak is expected to have
the largest impact on poultry prices globally. Prices in the local poultry industry moved upwards week-on-week. Domestic poultry prices are
expected to remain under pressure. Seasonal trends indicate that prices will decline until June before increasing into July.
Hides: The domestic hide price increased by 15.7% week-on-week. The hide market is waiting for news on whether the US will impose
additional tariffs on footwear and upholstery.

Week-on-week in the domestic beef market, class A prices traded down by 0.1%, class C prices traded up by 0.3% and weaner cattle traded down by 2.1%. Compared to a year ago local beef prices have declined across all grades with the weaner calf price 19.8% lower. The import parity for beef has declined by 1.2% compared to last week. The exchange rate has remained stable in the week following the elections.

Local beef prices are expected to remain fairly stable in May before increasing in line with seasonal trends for June into July. The local intensive livestock sector should benefit from lower grains and oilseeds prices. The international market is under pressure and there is concern that the market will not be able to recover, US prices are expected to experience a downward trend in the coming months.

The price for New Zealand lamb increased week-on-week by 0.7% whereas the price for ewes remained the same as last week's price and prices have returned to be the same as a month ago; year-on-year the prices did decline. The import parity for both lamb and ewes declined this week while the price for mutton shoulders dropped by 0.1%. The price for mutton ribs increased by 7% compared to a week ago, this is due to continued strong demand following the Easter period, Chinese demand for mutton is also high.

The domestic market moved upwards week-on-week with an increase in the price of class A and class C by 2.2% and 0.9% respectively. The price of feeder lambs increased by 5.3% this week. Although the market experienced positive movements week-on-week, the current prices are lower than prices a year ago with feeder lambs 15% lower year-on-year. The number of animals slaughter this week is 34.8% less than was slaughtered last week. The price of Dorper skins remained the same as last week; the price is 11.5% higher than prices a year ago.

International prices are expected to follow an upward trend in the next three months as the processor lamb margins are looking good and there is the potential of a shorter supply of lamb in the market thereby pushing up prices. The domestic market is expected to move upwards in the next three months, this is in line with seasonal trends as demand increasing during the winter months.

The US pork market traded positively overall this week with large amounts of volatility during the week in limit-down movements one day followed by limit-up movements the next day. The largest price movers this week were pork loins and ham which both increased by more than 3% since last week. The price of ham is 38.7% higher than the price a year ago. The US import parity for ribs and ham have increased with prices 30% and 47.2% higher respectively compared to prices a year ago. An index of US bacon prices has been created which will provide transparency regarding the volatility of the pork market as bacon is the part of the pig that is most volatile with respect to prices. This index currently shows volatility of around 40%.

The domestic pork market traded downwards this week with porker prices down 1% and baconer prices down 1.1%, the contract average is also down 1.1% compared to last week. Although prices are down week-on-week, they are higher than the prices a year ago with baconer prices 10.4% higher. The number of animals slaughtered this week is up by 5.7%. African Swine Fever has hit a fourth province as infected animals were found on a farm in Heilbron in the Free State. DAFF, in conjunction with veterinary services and industry are performing investigations to determine the origin of the disease as well as to identify any potentially affected farms. Producers are advised to practice vigilance and report any sudden deaths and illness to their local veterinarian.

The US pork market is expecting continued high levels of volatility due to the bullish nature of the African Swine Fever outbreak in China as well as the bearish nature of the US/China ongoing trade negotiations. The domestic pork market is experiencing concern regarding the African Swine Fever outbreaks occurring in the country. Seasonal trends indicate that the local pork prices are on a downward trajectory until June before beginning to increase into July.

The US poultry industry had a mixed week this week with the price of whole birds and leg quarters increasing by 1.1% and 3.2% respectively while the price of breasts declined by 2,6%. The price of fresh and frozen MDM declined week-on-week with the price of frozen MDM 17.9% lower than prices a year ago. The price of EU leg quarters declined this week however the price for both US and EU leg quarters is higher than prices a year ago. The African Swine Fever outbreak in China may result in the relaxation of restrictions regarding Chinese poultry imports from Brazil; the expected increased demand for protein due to the outbreak is expected to have the largest impact on poultry prices globally, however the outbreak is expected to have an impact on global prices across the other livestock sectors as well as the grains and oilseed markets.

Prices in the local poultry industry moved upwards week-on-week with the price of fresh whole birds up by 0.7%, frozen whole birds up by 1.1% and Individually Quick Frozen prices up by 0.2%. The US import parity for whole birds increased by 0.7% while the import parity for breasts declined by 4.4% week-on-week. Astral released their unaudited interim results for the 6 months ending March 2019; results show that their operating profit has declined by 51%. This is mainly due to higher feed costs experienced as well as poultry prices being under pressure.

Domestic poultry prices are expected to remain under pressure. Seasonal trends indicate that prices will decline until June before increasing into July. The international markets are expected to experience volatility as the tariff war is ongoing. The tariff negotiations are expected to have an impact on local prices. Poultry imports to South Africa are currently relatively low.

The domestic hide price increased by 15.7% week-on-week, but the current price is still far below the prices achieved last year. The
increase in price compared to last week is mainly supported by an increase in the average price of field hides. On a global level the hide
prices are dropping.

The hide market is waiting for news on whether the US will impose additional tariffs on footwear and upholstery coming into the US. This
will have a further impact on hide prices. The local hide market is expected to remain under pressure in the next three months.

Beef carcass prices: Class A: Weaner or A grade (0-18 months, Milk Teeth). Class C: (48 – 50 months, 8 Teeth). (Source: Red Meat Abattoir Association; beef carcass prices are a week delayed). Live weaner calf prices: Weaner (200-250kg) Average live weaner calf prices (Excluding VAT) at auctions and feedlot in the Northern Free State and auctions in the Central Free State (Bloemfontein) in the current week. AMIE carcass
import parity price; wholesale delivered price of beef trimmings 80VL (Excluding VAT) (Source: Association of Meat Importers & Exporters; prices are a week delayed) Beef trimmings are pieces of meat remaining after steaks, roasts, and other cuts are removed. Beef trimmings are very often used to make ground beef. VL: Visual Lean


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