Beef demand remains subdued; lamb and mutton prices traded mixed this week; pork prices continued to strengthen; and there was an increase in prices of single-type products in the poultry market on the back of increased demand.
Beef market trends
International beef market
Prices in the international beef market were mostly positive this week. The price of topside, rump, chuck and brisket increased by 6.7%, 4.0%, 3.5% and 2.4% respectively week on week. The price of striploin decreased by 3.0% week on week. Exports of Brazilian beef have reached record highs (up by 62% month on month) in October 2019. One of the main drivers of this growth was the increased exports to China.
Local beef market
Week on week, beef prices traded mixed across the different classes. The average Class A price was 1.2% lower this week at R44.70/kg. Class C prices moved 0.8% higher at R37.04/kg. The average weaner calf prices over the past week traded 0.5% higher at R29.93/kg. Demand remains subdued. Weaner calf prices found support this week from higher demand. The foot and mouth disease outbreak is only expected to have an effect on prices in the Northern areas. There's a temporary ban on live auctions in Limpopo, Mpumalanga, Gauteng and North West Provinces. Auctions are suspended with immediate effect until further notice. The Minister will gazette this in the next few days.
Outlook
It is expected that US cattle prices will remain firm going into 2020. Locally, prices have been under pressure due to a lack of demand. The struggling South African economy may negatively affect demand. Prices are expected to decline slightly in the next week amid the new FMD outbreak. Local beef prices may however recover in line with seasonal trends, as there is normally improved demand during the month-end period and going into the festive season.
Sheep meat market trends
International sheep meat market
The international price of ewes increased marginally by 0.8% week on week while the price of lambs increased by 3.1% week on week. The price of mutton ribs decreased by 0.5% week on week while the price of mutton shoulders remained unchanged week on week. The global sheep meat price continues to be supported by the increased demand for meat from China.
Local sheep meat market
This week, lamb and mutton prices traded mixed when compared to the previous week. The national average Class A carcass lamb prices decreased by 1.3% to R65.34/kg and the average Class C carcass prices increased by 1.0% to R48.40/kg. The average price for feeder lambs remained unchanged at R30.70/kg. The price for dorper skins declined by 7.1% to R21.67/skin and the price of merino skins increased by 3.5% to R42.86/skin this week. Compared to a year ago the price of dorper skins is 30.3% lower and the price of merino skins is 55.81% lower. Dryness across the country has increased. Grazing conditions will be negatively impacted, with the availability of food for animals becoming more limited and the size of disaster areas increasing.
Outlook
There is positive sentiment in the lamb/mutton market driven by the strong Chinese demand. Global demand is expected to continue to support the mutton market. Locally, lamb and mutton prices remain subdued due to cheaper meat alternatives such as pork and poultry, which add a bearish tone to sheep meat prices, prices are expected to trade sideways even during the usual 'high consumption period' in December.
Pork market trends
International pork market
The international pork market traded positively this week with the US pork carcass price, loin price, US rib and US ham higher by 5.8%, 2.1%, 2.4% and 15.7% respectively week on week.The import parity for pork ribs increased by 1.7% and the import parity of ham increased by 11.2% week on week. US production is up by 4% and Brazil 5%. China has taken the lead among Brazil's main poultry and pork export destinations.
Local pork market
This week, pork prices continued to strengthen, and traded mostly higher across the different categories due to increased demand. The average porker prices are 0.2% higher at R28.10/kg, while the average baconer prices are 0.3% higher at R27.18/kg. The average cutters prices were 0.3% higher at R27.72/kg and the average heavy price was 1.8% higher at R26.50/kg. The sausage price was 1.4% higher at R21.94/kg. Pork uptake is gaining momentum in the market, therefore supporting prices.
Outlook
Global: Lower Chinese supplies will boost demand for pork imports from other destinations. Brazil's pork exports to China have been gaining momentum. Locally, pork prices are supported by strong demand, because pork and poultry remain the relatively cheaper protein alternatives. The increased uptake seen in October is expected to continue into the festive season in line with seasonality.
Poultry market trends
International poultry market
The international poultry price was mixed this week. The price of US whole birds decreased by 0.5% while the price of fresh MDM increased by 2.5% and frozen MDM decreased by 0.5% week on week. Compared to a year ago the price of US whole birds and US chicken breasts are 8.4% and 10.3% lower respectively. The price of leg quarters in the US decreased by 0.2% and the price of EU leg quarters increased by 2.0% week on week. Compared to a year ago the price of leg quarters for the US are 2.5% higher and the price of EU leg quarters are 10.0% higher respectively. The US mechanically deboned meats are trending mostly steady. The US MDM supplies are large due to slow market activity. China has lifted its 4-year ban on the importing of US poultry.
Local poultry market
The average poultry prices moved mostly positive over the past week. The average prices for frozen birds were R24.67/kg down by 4.9% week on week and the average prices for fresh whole birds were R27.95/kg and IQF poultry prices were R25.78/kg up by 1.4% and 7.5% respectively during the week. Traditionally November is the best performing month in terms of uptake and pricing. Stakeholders in the poultry industry hope for seasonal trends to support demand. Supplies are low in the market. We are starting to see an uptick to the demand levels usually seen during this period for some products. The market has increased prices on single-type products (wings, drumsticks, thighs) on the back of increased demand.
Outlook
International: The USDA and FAO is forecasting global poultry production to be higher in 2020 surpassing pork production. The main driver being China accounting for more than half of the global production increase. The renewed access of US poultry products into China will be beneficial to the US farmers especially with the meat deficit in China. The South African poultry industry is starting to see an increase in demand. Local prices are expected to find continued support during the festive period following seasonal trends.
Hide market trends
Local hide market
The current average hide price is R1.61/skin, this is 6.7% lower than last week's price of R1.72/skin.
Outlook
The current price is 23.3% lower than prices were a month ago and the current hide price is 62.9% lower than prices were a year ago. The hide market remains under immense pressure. Abundant supplies continue to weigh down the global and local market. Locally prices are expected to decline further during the December holidays when the automotive industry closes for the festive season.
