The South African agricultural industry is in a good place, which often gets overshadowed by broader policy discussions.

The world’s largest cattle feedlot is expanding South African beef exports beyond the Middle East to take advantage of surging demand in China and other Asian markets.

Online food sales are growing, and beef marketers are using innovative ideas to put beef on consumers’ plates. “With online purchases, millennials are quickly changing how we are going to get food,” says Kari Underly, a master butcher in Chicago and owner of Range Partners a meat merchandising consultant.

The domestic beef and mutton market remained fairly stable this week with marginal price movements while the poultry market moved downwards and the pork market sideways.

Beef market trends

International beef market

Prices in the US beef market trended downwards this week, the largest week-on-week movement in price was striploin which declined by 8.7%. Compared to a year ago prices are much lower with prices of rump, striploin and topside between 15% and 18% down. The USDA cold storage report indicates that the frozen beef stocks are 5% down from last month and 9% down from last year. The wet weather in the US has resulted in spikes in the grain prices resulting in increased production costs of beef as feed costs increase which has added pressure to the beef prices. President Trump has announced the launch of a support system amounting to $16 billion to assist US farmers affected by the US/China trade war. The New Zealand beef market is experiencing increased demand from China with beef exports to China increasing by 3 600 tons compared to a year ago. It is expected that there will be extreme protein shortages due to the African Swine Fever outbreak, this has resulted in increased speculative buying of New Zealand beef.

Local beef market

The domestic beef market remained fairly stable this week with marginal price movements. The price of class A and class C beef increased slightly week-on-week while the weaner price declined by 0.6%. The weaner price is almost 21% lower than prices a year ago. The import parity has declined by 4.9% compared to last week.

Outlook

The US market is hoping for a slight bump in demand due to grilling season which will provide support to prices. The announcement of the trade assistance package by Donald Trump has indicated that there is no end in sight for the US/China trade war. Domestic beef prices are expected to remain fairly stable for May. From June the class C price is expected to increase while the class A price is expected to decline, weaner calf prices are expected to remain stable for the next three months.

Sheep meat market trends

International sheep meat market

Prices for New Zealand lamb and ewes increased week-on-week by 1.4% and 1% respectively. The New Zealand market has experienced high demand for lamb exports with their export values for this season to 11 000 tons ahead of last season, despite concerns at the start of the season. New Zealand lamb exports to China constitute 41% of this season's exports. Export demand from the EU is lagging behind last season's levels, however increased demand has been seen coming from Germany and the Netherlands. The import parity for lamb increased by 0.2% while the import parity for ewes declined by 0.2% week-on-week. The price for mutton ribs has increased by 2.2% week-on-week but is down by 5.6% year-on-year.

Local sheep meat market

In the local market this week the price for class A remained relatively stable with only a 0.2% increase in price while the class C price experienced a nice increase of 3% week-on-week. The price of feeder lambs declined by 0.3% this week, the current price is 17.1% lower than prices a year ago. The number of animals slaughtered this week is 27.4% more than last week. The price of dorper skins has increased by 7.9% week-on-week, prices are almost 17% higher than a year ago.

Outlook

Demand for New Zealand lamb is expected to remain strong which will lend support to international prices. The domestic price for class C is expected to follow an upward trend from May onward due to increased seasonal demand. Domestic prices for Class A and feeder lambs are expected to remain fairly stable for the rest of May going into June, in June the prices are expected to experience an increase before stabilising at that increased level in July.

Pork market trends

International pork market

The African Swine Fever Outbreak in China continues to be an issue internationally and seems to be providing support for international prices. Week-on-week the price of pork carcass, loin and ham each increased by approximately 2% while the US rib price declined by 3.9%. There is concern in the US market as China's preferred supplier for hog replenishment is the EU. Traders in the US are becoming concerned that the US will not regain all of the Chinese market share that they have lost during these US/China trade negotiations. The import parity for ham remained fairly stable this week while the import parity for ribs declined by 4.4% week-on-week. The USDA Cold Storage report indicates that the stock of frozen pork is 2% higher than last month's stock but is down by 2% compared to a year ago. Trump has announced the launch of a trade assistance package for US farmers affected by the US/China trade war, $100 million is dedicated for the establishment of new export markets through the Agricultural trade Promotion Programme (ATP).

Local pork market

The domestic pork market moved sideways this week with prices remaining stable as only marginal increases in prices were experienced. Year-on-year the price of porkers has increased by 3.7% while the price was baconers has increased by 10%. Compared to last week 5.9% more pigs were slaughtered this week, this is 25.8% more than the number of pigs slaughtered a year ago. The AMIE price for loins has increased by 26.1% compared to a year ago.

Outlook

The international pork market is expecting continued high levels of volatility in the short term. The US market still lacks certainty on which way the market will move with continued pressure from the US/China trade war as well as concerns regarding African Swine Fever. Prices in the domestic market is expected to remain fairly stable for the next three months. Domestic prices may experience a slight dip in June before picking up again in July to follow an increasing seasonal trend.

Poultry market trends

International poultry market

The US poultry market traded positively this week. The price of whole birds remained stable with a slight increase in price while the price of chicken breasts increased by 3.2% week-on-week. Fresh and frozen MDM prices increased by 3.8% and 1.2% respectively week on week. The price of US leg quarters declined slightly this week while the price of EU leg quarters increased. Compared to a year ago the price of US whole birds is 13.6% lower. The international poultry prices are expected to continue receiving support due to the African Swine Fever outbreak in China. The USDA cold storage report indicates that frozen chicken stocks are up 3% from last month. The $16 billion trade assistance package announced by Trump includes $14.5 billion for direct payments to producers through the Market Facilitation Programme (MFP) and $1.4 billion for commodity purchases through the Food Purchase and Distribution Programme (FPDP).

Local poultry market

Domestic poultry prices moved downwards this week. Compared to last week the price of frozen whole birds declined by 1.5%, fresh whole birds declined by 1% and Individually Quick Frozen prices declined by 1.3%. Increasing grain prices are expected to put the domestic poultry prices under pressure.

Outlook

International poultry prices are expected to experience continued support as demand increases due to the protein shortage following the African swine fever outbreak. Domestic poultry prices are expected to continue their decline for the rest of the month. In line with seasonal trends prices of whole frozen birds are expected to increase from June onwards while prices of whole fresh and IQF are only expected to increase from July.

Hide market trends

Local hide market

The domestic hide price for the week ending 24th May 2019 remained fairly stable at R1.72/kg on average, this is 0.15% lower than the average price last week. Current prices are 77.9% lower than prices a year ago. The RMAA price for feedlot hides declined by 2.4% while the RMAA price for field hides increased by 2.5% week-on-week.

Outlook

With domestic hide prices almost 80% lower than prices a year ago the domestic hide market continues to be under pressure. The global market for hides is struggling with the needed relief not expected in the short term.

Beef: Grazing conditions improved over most parts of the Free State, Mpumalanga, Limpopo and KZN after receiving good rainfall over December and January. Namibia and Botswana also received very good rainfall the past weeks and need to start rebuilding their depleted herds as well. This will also lower the immediate supply of not only breeder cattle into SA, which will be supportive for local beef prices. The FMD outbreak is still not completely under control. The national ban of auctions continues to place producer cash flows under pressure. The demand for weaner calves is low at the feedlots due to the uncertainty the latest FMD outbreak has caused.

Mutton:  According to Santam Agri’s weather report, some sporadic rainfall occurred over some parts of the Northern Cape and Eastern Cape. Drought conditions still persist in the regions, because the very hot day temperatures caused high evaporative demand. Natural grazing and pasture conditions in the large sheep producing areas continues to deteriorate.

Pork: The local pork prices traded lower this week due to subdued demand. This week was a flat week, consumer demand for red meat was low across the board. The average porker price is 1.0% lower at R27.11/kg, while the average baconer price declined by 1.7% to R25.79/kg. The average cutters prices were 1.7% lower at R26.38/kg and the average heavy price was 0.4% lower at R25.14/kg. The sausage price was 0.3% lower at R20.01/kg. Feed prices are the largest cost component in piggeries. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers. We expect that the hectares planted will improve (compared to estimates a month ago), supporting lower production costs.

Poultry: Local poultry prices and uptake was flat this week. Prices are expected to find support because poultry remains a cheaper protein source compared to beef and mutton. Seasonally January is a period of lower poultry prices, with poultry prices following the downward trend in beef and mutton prices. Prices are expected to pick up towards March.

Hides: The current average hide price is R1.42/skin. The current price is 2.9% higher than prices were a month ago and the current hide price is 64.1% lower than prices were a year ago. The local market remains under pressure. Global slaughter continues at a good rate, with global hide stocks also rising. Locally week on week prices were supported by the re-opening of the automotive plants and lower slaughter numbers.

Prices in the international beef market traded mostly negative this week. The price of topside, rump and brisket decreased by 2.9%, 4.7% and 0.4% respectively week on week. The price of striploin remained unchanged and the price of chuck increased by 4.7% week on week. Tight livestock inventories in Australia will drive beef production down. Strong global demand will continue to support cattle prices in 2020.

Week on week, beef prices were mixed in the different classes. The average Class A price remained unchanged at R45.01/kg and Class C prices moved 0.5% higher to R39.30/kg week on week. Grazing conditions improved over most parts of the Free State, Mpumalanga, Limpopo and KZN after receiving good rainfall over December and January. Namibia and Botswana also received very good rainfall the past weeks and need to start rebuilding their depleted herds as well. This will also lower the immediate supply of not only breeder cattle into SA, which will be supportive for local beef prices. The FMD outbreak is still not completely under control. The national ban of auctions continues to place producer cash flows under pressure. The demand for weaner calves is low at the feedlots due to the uncertainty the latest FMD outbreak has caused.

Strong demand will be the main factor in the global beef market in 2020, while beef production is expected to experience slow growth. Locally, the closure of all auctions in South Africa amid the latest FMD outbreak continues to cause uncertainty and puts producers under strain. Local beef prices is expected to follow a downward trend after the December period based on seasonal trends.

Sheep meat market trends

International sheep meat market

Outlook

This week, lamb and mutton prices traded negatively when compared to the previous week. The national average Class A carcass lamb prices decreased by 6.0% to R72.41/kg and the average Class C carcass prices decreased by 1.8% to R52.52/kg. The price of merino skins was down by 2.1% from R46.67/skin  to R45.71/skin this week. The Dorper skin price was down by 18.0% week on week at R28.69/skin. Compared to a year ago the price of dorper skins is 11.1% higher and the price of merino skins is 26.29% lower. According to Santam Agri’s weather report, some sporadic rainfall occurred over some parts of the Northern Cape and Eastern Cape. Drought conditions still persist in the regions, because the very hot day temperatures caused high evaporative demand. Natural grazing and pasture conditions in the large sheep producing areas continues to deteriorate.

The international price of lambs and ewes decreased by 6.8% and  6.2% respectively week on week. The price of mutton ribs increased by 5.0% week on week while the price of mutton shoulders remained unchanged week on week. Hot and very dry conditions continues to put pressure on grazing conditions in Australia. This combined with the Christmas shutdown added pressure on sheep slaughter prices. The market expects more declines in the coming weeks. There is currently a large decrease in Chinese lamb buying.

Looking forward, the reduced sheep flock and strong demand from China is likely to keep lamb prices supported in 2020. Locally, lamb and mutton prices remain subdued due to the availability of cheaper protein alternatives. Local mutton/lamb prices are expected to decline  which is normal in January following a high-demand and consuming festive season.

Local pork market

Outlook

The international pork market traded mixed this week with the US pork carcass price and loin price lower by 1.3% and 2.5% respectively. The US rib prices and US ham price higher by 0.9% and 2.5% respectively week on week. The import parity for pork ribs increased by 1.9% and  the import parity of ham increased by 3.0% week on week. In the EU, pork production are set to rise in 2020, driven by export opportunities. In China, ASF still dominates the outlook, Rabobank expects a decline in pork production in 2020. Pork production in North America is expected to rise above all other meat types.

The local pork prices traded lower this week due to subdued demand. This week was a flat week, consumer demand for red meat was low across the board. The average porker price is 1.0% lower at R27.11/kg, while the average baconer price declined by 1.7% to R25.79/kg. The average cutters prices were 1.7% lower at R26.38/kg and the average heavy price was 0.4% lower at R25.14/kg. The sausage price was 0.3% lower at R20.01/kg. Feed prices are the largest cost component in piggeries. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers. We expect that the hectares planted will improve ( compared to estimates a month ago), supporting lower production costs.

Outlook

The international pork market traded mixed this week with the US pork carcass price and loin price lower by 1.3% and 2.5% respectively. The US rib prices and US ham price higher by 0.9% and 2.5% respectively week on week. The import parity for pork ribs increased by 1.9% and  the import parity of ham increased by 3.0% week on week. In the EU, pork production are set to rise in 2020, driven by export opportunities. In China, ASF still dominates the outlook, Rabobank expects a decline in pork production in 2020. Pork production in North America is expected to rise above all other meat types.

The local pork prices traded lower this week due to subdued demand. This week was a flat week, consumer demand for red meat was low across the board. The average porker price is 1.0% lower at R27.11/kg, while the average baconer price declined by 1.7% to R25.79/kg. The average cutters prices were 1.7% lower at R26.38/kg and the average heavy price was 0.4% lower at R25.14/kg. The sausage price was 0.3% lower at R20.01/kg. Feed prices are the largest cost component in piggeries. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers. We expect that the hectares planted will improve ( compared to estimates a month ago), supporting lower production costs.

The USDA in its Quarterly Hog's and Pigs report estimates the Sep-Nov 2019 pig herd higher than the same period in 2018, which will be supportive of a higher slaughter and production rate in the first half of 2020. Given the high prices in China in 2019 it is expected that the EU, Brazil and Canada will increase pork shipments to China in 2020. Locally, prices are expected to follow a sideways to downward trend from January. It is normal behaviour for consumers to focus on other financial obligations such as school after a season (festive holidays) of high meat demand and consumption.

Outlook

The international poultry price traded mostly higher this week. The price of US whole birds increased by 1.1% week on week. The price of fresh MDM increased by 2.3% and the price of frozen MDM increased by 1.0% week on week. Compared to a year ago the price of US whole birds and US chicken breasts are lower by 11.9%  and 15.2% respectively. The price of US leg quarters increased by 0.7% and the price of EU leg quarters increased by 3.7% week on week. Compared to a year ago the price of US leg quarters are 8.7% higher and the price of EU leg quarters are 24% higher. The trade issues between the EU and Brazil is still an on-going concern, and is likely to carry-on for the 1st half of 2022. Global breast meat prices is expected to remain under pressure in 2020, because Europe is the only western market that’s open to breast meat imports and changes are needed in Brazil’s animal health monitoring systems.

The average poultry prices were negative this past week. The average price for frozen birds declined by 4.0% to R25.78/kg, the average prices for fresh whole birds also declined by 4.0% to R27.227/kg and IQF poultry prices were down by 4.1%  to R23.00kg week on week. Poultry industry players do not anticipate any increases in the next few weeks. Feed prices are the largest cost component in the intensive livestock production such as broiler units. The improved rainfall during the planting of maize and soybean crop increased the business confidence amongst our maize and soybean producers.  We expect that the hectares planted will improve.

For January 2020,  broiler prices are forecasted lowered due to higher production estimates adding downward pressure on markets. The USDA's January report forecasts a larger broiler production driven by continued expansion of laying flock in the US. Some "wildcards" could have an effect on markets such as Brexit. Local poultry prices and uptake was flat this week. Prices are expected to find support because poultry remains a cheaper protein source compared to beef and mutton. Seasonally January is a period of lower poultry prices, with poultry prices following the downward trend in beef and mutton prices. Prices are expected to pick up towards March.

Outlook

The current average hide price is R1.42/skin, this is 2.9% higher than last week’s price of R1.38/skin.

The current price is 2.9% higher than prices were a month ago and the current hide price is 64.1% lower than prices were a year ago. The local market remains under pressure. Global slaughter continues at a good rate, with global hide stocks also rising. Locally week on week prices were supported by the re-opening of the automotive plants and lower slaughter numbers.

NB* Hide prices are determined as the average of the RMAA (Red Meat Abattoir Association) prices and prices of independent companies.

Notes on data used

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

Sheep carcass prices: Class A: lamb or A grade (0-12 months, Milk Teeth).  Class C: (28 – 48 months, 8 Teeth). (Source: Red Meat Abattoir Association; sheep carcass prices are a week delayed).  Feeder lamb (27-41kg) Average live feeder lamb prices (Excluding VAT) at auctions and feedlot in the Northern Free State and auctions in the Central Free State (Bloemfontein) in the current week. Dorper Skins:  Price per skin (Source: Red Meat Abattoir Association; Dorper skin prices are a week delayed). Slaughter numbers: The total number of sheep (all grades) slaughtered in the week (Source: Red Meat Abattoir Association; slaughter numbers are a week behind). AMIE carcass import parity price for mutton ribs and shoulders: wholesale delivered price of mutton ribs and shoulders (Excluding VAT) (Source: Association of Meat Importers & Exporters; prices are a week delayed)

Pork carcass prices: Porker: Average price for porker pigs (weighing 20-55.99kg) across the fat thickness levels (PORCUS) Baconer: Average price for baconer pigs (weighing 6579.99kg) across the fat thickness levels (PORCUS). (Source: Red Meat Abattoir Association; pork carcass prices are a week delayed). Fat thickness level (PORCUS): P: <12mm, O: 13-17mm, R: 18-22mm, C: 23-27mm, U: 28-32mm, S: >32mm. Slaughter numbers: The total number of pigs (all grades) slaughtered in the week (Source: Red Meat Abattoir Association; slaughter numbers are a week behind). AMIE loin import parity price: wholesale delivered price of pork loins (Excluding VAT) (Source: Association of Meat Importers & Exporters; prices are a week delayed)

As the first China International Import Expo (CIIE) held in Shanghai this last week comes to an end, attention turns to the South African beef industry, one of the clear winners of increased favourable relations between China and South Africa.

Two recent papers by British and other scientists are calling for big changes in the type and amounts of meat we eat. One of these papers, co-authored by Professor Mark Sutton from the Centre for Ecology and Hydrology, calls for a 50% reduction in total meat consumption.

If we all swapped beef burgers and bacon sandwiches for vegetarian alternatives most of the week, we could cut greenhouse gas emissions from the food sector by more than half.

The year 2019 will be a challenging one for South African beef cattle farmers. One challenge that became apparent by the end of 2018 was environmental related, as grain and oilseed producing areas of the country experienced dryness which led to delays in plantings, and thus leading to an increase in agricultural commodity prices, particularly maize.

A number of factors played together to create the perfect storm leading to the sharp decline in livestock prices during the past week. Consumers are under pressure due to our weak economic growth and relatively high energy prices and cannot pay more for protein.

It seems curious timing, doesn’t it, that the week that the British medical journal The Lancet came out with the recommendation to reduce our beef consumption by 90 per cent, that the new Canada Food Guide would mirror the recommendations by saying we need to reduce our consumption of red meat and sugar.

The recent recovery in weaner calf prices fuelled by tax purposes was short lived and did not carry though the past week. The dry conditions and lack of sufficient follow up rainfall in the grain production regions lead to price increases for yellow maize and soybeans.

WINDHOEK- Namibia yesterday became the first African nation to export beef to People’s Republic of China, when it transported the first 21 tonnes of beef to China the world’s largest consumer market.

The profitability of pork production will be under pressure from April to June due to increased animal feed prices.

Increased demand and optimism surrounding the beef industry is driving beef futures prices higher. China is one of the largest beef importers in the world, however the US only has approximately 1% of that market.

African Swine Fever spreads through China.

I am ending this week, not by highlighting an agricultural story that dominated the news headlines – as it is typically the case — but some encouraging developments for the South African beef industry.

The short week is resulting in reduced activity on the international market this week. In the US topside, rump and striploin prices all increased week-onweek while chuck and brisket prices declined week-on-week.

Buenos Aires, April 15th. People at the beef, pork and poultry industries are really very enthusiastic about the future, due to the Chinese expected rising demand.

Beef: The loss of the pig herd in China due to African Swine Fever will support the demand for US beef and benefit exports.