There is concern amongst some buyers that the protein shortage caused by the African Swine Fever outbreak in China is not going to be as high as estimated. Chinese buyers have cautioned that much of the current buying is speculative and these high prices are not supported by the current Chinese wholesale beef prices. If the Chinese wholesale prices don’t increase to the anticipated high, then Chinese buyers may sit on inventory rather than sell it which would slow down the purchase of beef and as such prices may experience a drop. Increased grains prices has placed additional pressure on the US beef prices.
Beef: There is concern amongst some buyers that the protein shortage caused by the African Swine Fever outbreak in China is not going to be as high as estimated. Chinese buyers have cautioned that much of the current buying is speculative and these high prices are not supported by the current Chinese wholesale beef prices. Local beef prices remained fairly stable this week. Domestic prices of class C and weaner cattle are expected to remain fairly stable for May going into June with prices expected to increase from July onwards.
Mutton: The New Zealand lamb and mutton market continues to experience high levels of demand which resulted in the boosted prices. The New Zealand lamb price and ewe price both increased by 1% week-on-week. The price of New Zealand mutton shoulders has increased by 5.1% week-on-week; the current price is 1.4% higher than prices a year ago. In the local market the class A price remained fairly stable with only a slight increase of 0.5% in price week-on-week while the class C price dropped by 3.5% week-on-week.
Pork: The US pork rib price experienced a large decline this week of 8.5%, as South Africa is an importer of pork ribs due to high demand this international price decline may be beneficial to South African consumers. The domestic pork market traded positively this week with porker prices experiencing an increase of 1.3% and baconer prices moving up by 4% week-on-week
Poultry: The US poultry market experienced a 0.9% decline in the price of whole birds this week while the price of breasts remained the same as last week. The international poultry market was hoping to experience increased prices following the African Swine Fever outbreak in China, however the majority of the protein demand appears to be falling to beef rather than poultry as the industry had hoped. The domestic poultry market remained fairly stable this week with marginal declines in prices; the price of whole fresh birds as well as IQF declined by 0.6% while the price for whole frozen birds declined by 0.8% week-on-week.
Hides: The average price for domestic hides moved upwards by 1.02% to R1.74/kg for the week ended 31 March 2019. The current hide price is still considerably low compared to the price a year ago of R7.74/kg.
Local beef prices remained fairly stable this week with the price of class A moving up by 0.1% and class C down by 0.5% week-on-week. The price of weaner calves increased by 1.1% week-on-week. Year-on-year the local prices have declined for both class A and C as well as the weaner price which is 20.4% lower to prices received a year ago.
International prices are expected to experience some volatility in the short term as the market waits for a more definitive direction following news on the US/China trade negotiations as well as the impact of the African Swine Fever outbreak. The market is hopeful that prices will remain high in the next few weeks. Domestic prices of class C and weaner cattle are expected to remain fairly stable for May going into June with prices expected to increase from July onwards. The largest price increase is expected for class C beef while weaner cattle prices are expected to increase to a lesser extent. Class A prices are expected to experience marginal declines in the next three months.
The New Zealand lamb price and ewe price both increased by 1% week-on-week, with the lamb price down by 1.7% from a year ago and the ewe price returning to the same level it was a year ago. The price for New Zealand mutton ribs have declined by 4.6% week-on-week with the price 12.2% down compared to prices a year ago. The price of New Zealand mutton shoulders has increased by 5.1% week-on-week; the current price is 1.4% higher than prices a year ago. The New Zealand lamb and mutton market continues to experience high levels of demand which resulted in the boosted prices.
In the local market the class A price remained fairly stable with only a slight increase of 0.5% in price week-on-week while the class C price dropped by 3.5% week-on-week. This dip in class C price is in line with the seasonal trends as prices are expected to bottom out in May. The price of feeder lambs experienced an increase of 2.3% this week. The price of merino skins increased by 6.8% week-on-week to a price of R48.75/skin, however, this price is almost 50% lower than prices received a year ago.
New Zealand prices are expected to continue their stead increase as demand levels are expected to remain high for the next three months. In the domestic market: class C prices are expected to bottom out in May before increase from June onwards, class A prices are expected to be on an increasing trend but increases in prices are not expected to be as large compared to class C. Feeder lamb prices are expected to follow a relatively sharp incline in the next three months.
The pork market experienced mainly negative price movements this week with a decline in the price of US pork carcasses down by 2.1% week-onweek. The price of loins remained fairly stable with a slight decline in price of 0.4% where as the price of US ham increased by 3.3% week-on-week. The US pork rib price experienced a large decline this week of 8.5%, as South Africa is an importer of pork ribs due to high demand this international price decline may be beneficial to South African consumers. The closing price for hogs at the end of the day on the 31st of May should give an indication of the short term direction that the market will take.
The domestic pork market traded positively this week with porker prices experiencing an increase of 1.3% and baconer prices moving up by 4% weekon- week. The number of pigs slaughtered this week is fairly consistent with the number slaughtered last week, the number of animals slaughtered has increased by 30.8% compared to a year ago. The local pork market is expected to experience increased demand as China’s import demand increases in order to cover their production loss from the African Swine Fever outbreak.
US pork prices are expected to increase in the short term as seen in the futures price of lean hogs. However, there are high levels of volatility in the hog market as prices are impacted by both the African Swine Fever Outbreak in China as well as the ongoing US/China trade negotiations. Domestic pork prices are expected to continue on their increasing trend for the next three months. Local prices may experience a slight dip in July but it is not expected to last long.
The US poultry market experienced a 0.9% decline in the price of whole birds this week while the price of breasts remained the same as last week. Prices for fresh and frozen MDM declined by 0.2% and 1.5% respectively week-on-week. US leg quarters increased by 0.8% week-on-week while the price for EU leg quarters dropped by 7.3%. The international poultry market was hoping to experience increased prices following the African Swine Fever outbreak in China, however the majority of the protein demand appears to be falling to beef rather than poultry as the industry had hoped.
The domestic poultry market remained fairly stable this week with marginal declines in prices; the price of whole fresh birds as well as IQF declined by 0.6% while the price for whole frozen birds declined by 0.8% week-on-week. Astral’s Standerton branch is experiencing water supply shortages and interruptions which is having significant cost implications for the company currently estimated at R85 million. Astral is unable to process at their usual levels; other processors are buying up the extra stock, prices are expected to drop slightly in the next few weeks.
International poultry prices are expected to remain fairly stable in the coming months. However, international protein markets are expected to experience volatility in the short term due to the African Swine Fever outbreak in China as well as the US/Chine trade negotiations. Local prices for whole fresh birds and IQF are expected to follow a similar seasonal trend of declining prices that bottom out in July before increase from August. Prices of whole frozen birds are also expected to continue their decline, however prices are expected to hit bottom in June and then increase from July onwards.
Local prices are holding under the continued pressure with prices 77.5% lower than prices received a year ago. It is estimated that hides from Africa account for 8% of the world's hide market, with the potential for Africa to grow their share in the global hide market, however, at these low prices growth of the hide market is not expected in the short to medium term.
