Beef market trends
International
New Zealand steers traded 2,04% lower over the past week at 5,77NZ$/kg and cows traded 1,16% lower at 4,27NZ$/kg compared to a week ago. In the US, beef prices for the week were mostly lower as follows: Topside traded 3,6% higher at $207,88/cwt. Rump was 1,62% lower at $269,23/cwt and strip loin was 5,8% lower at $530,89/cwt. Chuck traded 1,95% lower at $214,45/cwt. Brisket traded 0,46% lower at $244,65/cwt. The carcass equivalent price was 2,77% lower at $286,03cwt.
Bullish factors
In its monthly US Department of Agriculture world supply and demand estimates report (USDA Wasde), beef production was reduced from the previous month largely due to lower expected fourth-quarter fed cattle slaughter. Carcass weights are forecast lower on a higher expected proportion of cows in the slaughter mix.
Bearish factors
For 2019, beef production is expected higher from last month as larger placements in late 2018 and early 2019 are marketed during 2019. The number of cattle being placed on feedlots in the US continues to break records every month. August placements were up 6% on July, and were the highest August placements since 2011; up 7% on last year.
Domestic
Week-on-week, beef prices were mostly higher across the different classes. The average Class A price was 0,04% higher this week at R45,67/kg. Class C prices were 0,43% higher at R39,83/kg. The average weaner calf prices over the past week traded 2% lower at R32,73/kg.
The average hide price this week softened, and decreased when compared to the previous week. The hide market remain under pressure. The average hide price was 2,6% lower w/w at R5/kg green. Whilst the better grades find a place in the market; the lower grade materials have not yet found a price point. Overall, the hide market sentiment remains bearish, in line with the weak international hide market.
NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies.
Bullish factors
During August 2018, an estimated 211 951 head of cattle were slaughtered. This is 0,8% fewer head of cattle slaughtered month-on-month, and 11% less cattle slaughtered compared to the same time a year ago. Cattle slaughter numbers in 2018 are lower due to the herd rebuilding process that is underway.
Pasture conditions may improve should seasonal rains materialise sooner. Beef prices may be supported by better demand that comes with the approaching warmer conditions. Warmer temperatures normally encourage outdoor grilling.
Bearish factors
Cheaper alternative proteins like pork and poultry are readily available and add a bearish tone to prices. Consumers are under pressure and some may not be willing to pay more for beef. This may result in a switch to other products.
Outlook
Internationally, total protein inventories remain large, which continues to weigh on the beef market.
Locally, prices are expected to follow an upward trend due to improvement in demand during the warmer months, but pressure on consumers may limit the increases.
Sheep meat market trends
International
New Zealand lamb and mutton prices traded mixed this week compared to last week. Lamb prices were 0,6% lower at NZ$8,25/kg. Ewe prices traded sideways at NZ$5,10/kg. The import parity price for lamb was 1,1% higher at R85,50/kg, while the import parity price for mutton was 1,6% higher at R57,03/kg.
Bullish factors
There is good confidence in the lamb market driven by the strong Chinese demand and low supply out of Australia.
New Zealand beef and lamb export prices are forecast to remain strong in 2018/19 supported by a weaker kiwi dollar and strong export demand, according to Beef and Lamb NZ. The farmer organisation indicated that while there is potential for international sheepmeat and beef trade to be disrupted in 2018/19 because of geopolitical uncertainty, large scale droughts, and disease outbreaks in competing animal proteins, the outlook for New Zealand's sector remains positive.
Bearish factors
The gap between lamb and competing proteins has grown too wide, which may bring consumer resistance in the market.
Domestic
This week, lamb and mutton prices were mostly lower this week when compared to the previous week due to the lack of demand in the market. Lamb and mutton prices were as follows: The national average Class A carcass lamb prices decreased by 0,2% to R75,87/kg and the average Class C carcass prices meanwhile increased by 6,4% to R62,27/kg. The average price for feeder lambs traded 0,5% higher at R43,37/kg. The average price for dorper skin is 18,1% lower at R30,56/skin and merinos were 0,6% lower at R95/skin.
Bullish factors
During August 2018, an estimated 344 457 head of sheep were slaughtered. This is 11,2% less sheep slaughtered compared to the same time a year ago. Sheep slaughter numbers for the first eight months of 2018 are lower when compared to the previous three years, due to the herd rebuilding process that is underway.
Shrinking production areas negatively impact sheep production.
The local low herd numbers for sheep limit supplies and support meat prices in the medium to long run.
Seasonal trends may support sheep meat prices ahead of the festive season.
Bearish factors
During August 2018, an estimated 344 457 head of sheep were slaughtered. This is 4,5% more head of sheep slaughtered month-on-month.
The struggling South African economy may negatively impact on demand.
Lamb and mutton remains the most expensive meat in the market. Consumer resistance to high lamb and mutton remains a risk. Cheaper alternative proteins (pork and poultry) are readily available and add a bearish tone to prices.
Outlook
Internationally, steady demand from China and restricted lamb supply out of Australia are supporting the lamb market outlook.
Locally, prices remain under pressure due to subdued demand during mid-month.
Pork market trends
International
The average weekly US pork prices were mostly lower over the past week. Carcass prices were 0,5% lower at US$78,79cwt, loin prices were 3,8% lower at US$80,58/cwt, rib prices were 2,4% lower at US$117,65cwt and ham was 1,9% lower at US$60,22/cwt.
Bullish factors
The pork production forecast is lowered on smaller second-half commercial hog slaughter and lighter carcass weights.
The 2019 export forecast is raised on strong global demand for competitively priced US pork products.
Bearish factors
The US hog market is under pressure due to plentiful supplies. Heavy rains in key production areas in the US were encouraging producers to market their animals more quickly, adding to the abundant supplies available in the short-term. The USDA late in September showed the total US hog herd about 3% larger than a year ago.
Domestic
This week, pork prices strengthened, and traded mostly higher across the different categories. The latest average pork prices are as follows: The average porker prices are 0,2% higher at R26,59kg, while the average baconer prices are 0,6% higher at R24,93/kg. The average cutters prices were 0,5% higher at R25,60/kg and the average heavy baconer price was 1,0% higher at R24,10. The SAU price was meanwhile 1,5% lower at R17,90/kg.
Bullish factors
During August 2018, an estimated 241 649 head of pork were slaughtered. This is 2% less pork slaughtered compared to the same time a year ago.
The pork industry may benefit from the underlying support from the higher red meat prices, and increased demand as warmer temperatures encourages outdoor braai.
The lower product prices are expected to continue to support sales, and therefore add support to pork prices.
Bearish factors
During August 2018, an estimated 241 649 head of pork were slaughtered. This is 7% higher pork slaughtered compared to the same time a year ago.
There are still plentiful supplies of pork in the market, which needs to clear before seeing the strong pork prices.
Outlook
Internationally, the US hog market remains under pressure due to plentiful supplies, but pork exports are expected to remain strong.
Locally, pork prices are following an increasing trend, supported by good uptake.
Poultry market trends
International
Poultry prices in the US were mostly lower over the past week. Whole bird prices were 2,5% lower at 80,56USc/lb. Breast traded 2,3% lower at 85,00USc/lb, while leg quarters traded sideways at 27,50USc/lb.
Bullish factors
The broiler and turkey production forecasts are reduced on expectations of slightly lower slaughter for the remainder of the year.
According to the North Carolina Department of Agriculture and Consumer Services, millions of farm animals drowned in the recent flooding. Nearly 3,5 million chickens and turkeys have died so far due to Hurricane Florence.
Recent African swine flu outbreaks in China can indirectly impact the global poultry market.
Bearish factors
Concerns about the new avian influenza (AI) outbreaks are increasing as we approach the northern hemisphere winter. Bulgaria has reported an outbreak of bird flu virus on a farm in the southern district of Plovdiv. China has also reported H5N6 bird flu case on poultry farm in Guizhou province at the end of last month where local authorities culled 32 352 birds. China also registered a new case of H5N6 avian bird flu this week on a poultry farm in southern Hunan province, where 1 029 birds were culled.
Domestic
The average poultry prices over the past week were mostly lower. The average prices for frozen birds were 0,8% higher at R25,69/kg during the week. Whole fresh medium bird prices were 0,4% lower at R25,82/kg, while IQF prices were 0,4% lower at R23,32/kg.
Bullish factors
Demand may benefit from warmer temperatures which encourage outdoor grilling.
Bearish factors
There are plentiful supplies in the market, currently weighing on prices.
Outlook
Internationally, record levels of animal protein is weighing on the market.
Locally, prices remain subdued due to higher supplies in the market, but are expected to improve due to better demand and in line with seasonality. Meanwhile, consumers remain under pressure. ABSA TRENDS
