Tracking yield weighted Australian beef retail prices and producer share

The surge in Australian young cattle prices and the competition from other protein, particularly chicken, has seen average retail beef prices tracking at levels which see the estimated Australian producer share climb to previously unseen levels in our records.

In order to reflect a realistic average retail beef price, a major supermarket weekly catalogue is used to generate a carcase yield weighted price. This is tracked over time and a producer share is calculated by comparing the carcase weight retail price with the Eastern Young Cattle Indicator published by Meat & Livestock Australia Ltd.

Colombia sees a 3.4% drop in Q2 2016 cattle slaughter

During the second quarter of 2016 , 931,943 cattle were slaughtered , representing a variation of -3.4% compared to the same period of 2015 where 964,838 head were slaughtered and a variation of -1.3% was recorded. Slaughter of male calves showed a variation of -9.1% and -0.9% respectively, while the slaughter of females had a variation of 0.5%. In turn, the slaughter of cattle destined for export registered a variation of 222.9% from 7,838 heads in the second quarter of 2015 to 25,305 heads in the second quarter.

It is notable that there was a substantial increase in cattle slaughter for export from Colombia.

By department , the biggest shares in the slaughter of cattle in the second quarter of 2016 were recorded in Antioquia (17.9%) with 167,124 head, Bogotá1 (16.6%) 154,933 head, Santander (7.8%) 72,851 head, Valle del Cauca (6.5%) Meta heads and 60,175 (5.8%) 54 238 head.
Detailed report is here. (Spanish) . The terms of slaughter intended for export presented a variation of 209.0%, 53,692 head were slaughtered in the second quarter of 2016 and the same period last year 17,377 head.
The slaugther of buffaloes recorded change of 32.6% from the first half of 2015 was 44.8%. By sex, females presented the slaughter variation of 88.3% and 22.2% males. Almost 4 million head of cattle were slaughtered in 2015. The figure for first half 2016 is 1.87 million head. A range of data indicates Columbia is in the top 10 in terms of global cattle inventory. An MLA report in 2016 indicated Colombia cattle prices were similar to Peru at around US$300 per 100 kg liveweight sold.

Sudan has the highest sheep meat consumption per capita according to OECD

The figures are for 2015 and the OECD figure for Sudan for sheep meat per capita consumption is 10 kilograms.

OECD report
It seems like demand is strong as the Mayor of the town of Wau has ordered a meat price reduction. Another article refers to a price of 50 pounds being mandated compared with 120 pound in the market. The FAO price tool does not include a mutton price in its database. However, the Gedaref State, Sudan State Food Security Technical Secretariat (SFSTS) report from January-March 2016 refers to SDG 60 per kg which is equivalent US$9.88 per kg.

New specialty steak cut, the Bonanza Cut, unveiled by meat science professor

The small, quarter-moon-shaped slice of beef that has a taste and tenderness that outclasses any other cut except filet mignon made its debut this week for media, meat industry representatives and University officials in a private tasting.
http://naes.unr.edu/demello/
De Mello started developing this new cut in 2014 while working for the beef industry. With support from JBS, a world leader in processing of beef products, he conducted research on the cut at the University beginning in 2015 and found it compared extremely well against other cuts of beef.

The objective of the experiment was to evaluate tenderness and cooking yields of the m. infraspinatus caudal tip (the very far end of the flat iron steak) and verify the opportunity of exploring this cut as an added-value product. Research found that the Bonanza Cut has superior marbling and higher fat content compared to other meat cuts, including the flat iron steak.

"Meat processors will like this specialty cut for a number of reasons, one because it's very easy to trim," de Mello said. "When you separate the chuck and the ribs, the Flat Iron steak goes one way - with the Chuck - and the relatively small end stays with the rib side; this is the Bonanza Cut.

"The industry will also like it because instead of selling it for $1 a pound as lower quality meat, they can showcase it for what it is, a premium cut worth more like $5 a pound."
http://www.unr.edu/nevada-today/news/2016/the-bonanza-cut

http://naes.unr.edu/demello/bonanza_cut.aspx

Australia sits on top of global cattle price tables

Australia has gone from the bottom to the top of the price tables in 4 years. It is hard to believe the low level of prices in 2013 at only AUD$629 per head. We equate values by converting to Australian dollars and then use a 280 kilogram carcase to compare values. USA, Canadian and European cattle prices are well down in 2016 and the comparison is made in August of each year.

Russian foodservice market contracts in 2016

According to the Russian Federal Statistics Service (Rosstat), turnover of restaurants and cafes in Russia fell by 5.5 percent to 1.3 trillion rubles in 2015. In the first half year of 2016, turnover of restaurants, cafes and bars fell by 3.7 percent to 615.9 billion rubles in comparison to the same period of 2015.

An article in Russian media noted: turnover in the second quarter of this year - by 2.5%, to 321.1 billion rubles. Rosstat is the agency that published detailed data on the Russian economy. According to Rosstat, Russia's GDP has been declining for six consecutive quarters. Since the beginning of the crisis, the Russian economy has lost 5.5% of GDP. In the first quarter of 2016 Russian Nielsen Consumer Confidence Index fell to record lows. Further details in a range of matters in food are in the USDA FAS GAIN report released 15 August 2016.

Brazilian state Mato Grosso sees big fall in shipments to China

China, which has been the largest purchaser of Mato Grosso meat, decreased in June, turnover in 61.9% "in the collection, on-month." The IMEA - Mato Grosso Institute of Agricultural Economics - believes that it is a "strange particularity in minimal" and that the reduction of purchases by the Chinese generated "concern to the market." The devaluation of the dollar against the real (passing from 20% in January so far) "negatively affected Brazilian exports" and meat sales abroad are having "negative growth since May." Sales last month were 0.67% lower than in June. "It is the smallest value obtained from 2013 in a month of July."

Business were $ 71 million (in 2015 was 97 million dollars) and last month 72 million. World Beef Report noted: China show recovery signs but negotiations are hard. The Chinese beef market “is not yet adapted” to the prices required by the Mercosur industry. Operators working in that market coincide that demand show signs of recovery but that are not yet transferred to prices. A trader reports a shipment of shin & shank from Uruguay at US$/t 4,900 CFR, 5+8 rib at US$/t 3,200 CFR and knuckle at US$/t 4,800 CFR. Brazilian fresh beef sales to China sunk to 3,495 tons swt in July, the lowest volume in the trade current since June of last year, when China reopened its market for Brazilian fresh beef. A worse competitiveness of exporters due to a currency revaluation, the problems of Chinese importers to accept the prices asked by exportation and improvements in other markets that compete for the same cuts, like Russia, were the reasons for such a sharp fall.

FAO - Technical advances could be the key to progress in the Puerto Rican livestock industry

"Puerto Rican livestock producers of beef only represent a10% of this market, despite the huge potential for growth", said the president of the Farmers Association, Héctor Iván Cordero."This is an industry that, if given the attention it needs, has a bright future," he pointed out.
FAO maintains a service to cover Latin America and the Caribbean. The full publication in Spanish is here. "What has to be done is to standardize the industry and bring about the changes through regulations. The most important livestock sector in Puerto Rico is the milk. It represents 25% to 29% of the agricultural gross income although in recent years has been in decline. The meat is not in the same place because it is a sector that has not been properly exploited, but the potential is tremendous, "said the president of the Farmers Association. According to the last agricultural census of Puerto Rico, made in 2012, on the island there are 2,276 farms with beef cattle. In these there are about 96,000 head of cattle, representing an increase of 30% compared to 2007.

USDA and ICRA India reports - India Buffalo Exports

USDA article: From Where the Buffalo Roam in June 2016 set the scene.
ICRA India followed in August 2016 with an article.

Courtesy ICRA

Recent figures indicate some shrinkage of the Indian buffalo market segment but huge shipments to Vietnam and Malaysia, in particular, continue.
FAO produced an earlier report, which is online in full, The report also includes some interesting photographs.
A very interesting USDA ERS chart indicates the competitive nature of Indian buffalo in terms of competitor pricing.

Australian meat export unit values ease in June quarter 2016

Australian beef export unit values are down from the peak level but still remain within historical high levels.

The 6 period moving average is now around AUD $7 per kg FOB. The figures are derived from ABS beef export volumes and values published in the last month.

Russian beef market collapses for Brazilian exporters

Latest figures published by Brazilian organisation ABRAFRIGO show that for the 7 months ended July 2016, Brazilian beef exports to Russia dropped 25% in volume and 38% in value. Unit value was a rather low figure of US$2,814 per tonne in 2016 on volume of 77,743 tonnes and US$218.8 million sales. Jan-July 2015 unit value was US$3,380 per tonne.

Latest USDA FAS report noted "In 2016 beef production is forecast to decline 3.3 percent to 3.310 MMT CWE as cattle inventories decrease 1.6 percent due to stagnation of the Russian dairies which supply most cattle for slaughter. The forecast for beef imports is 630,000 MMT CWE, flat year-on-year. Imports account for 32 percent of total beef supplies and push prices up while beef consumption will decline by 2 percent after a 14 percent drop in 2015"

Record high young cattle prices in Australia see producer share 67%

Based on yield weighted major supermarket catalogue retail prices and calculating cattle producer share based on a carcase weight adjusted price per kilogram, Australian producers are enjoying a record share of the retail consumer dollar.

Vietnam is the major market for Indian buffalo

Vietnam purchased over 600,000 tonnes of Indian buffalo in the 2015-2016 reported year. Value of US$1.9 billion at a unit value of US$3,293 per tonne. An article published over 12 months ago in Chinese media indicates that a proportion of the "grey" trade (smuggled meat) came via Vietnam.

Data sourced from the General Statistics Office of Vietnam shows the decline in the Vietnam domestic buffalo herd and the trend down in recent years of the cattle herd.

In the 7 months of 2016 Australia exported a total volume of 3,984 tonnes to Vietnam, mainly beef and beef offals. It is likely that a proportion of this trade finds its way via the grey channel into China.

Vietnam is a huge market for Australian live cattle exports with almost 283,000 head shipped in the fiscal year ended June 2016, compared to 304,000 the previous year. The market and trade has been plagued by adverse publicity and supply chain breaches. The record published by Agriculture Department dates back to 2013 for Vietnam. Investigations 106 and 104 are still in progress. A breach notified in February #97 was covered in a first part of year release.

India exported meat worth USD 568 million in April-May

Indian Express online reported the export earnings of Indian meat exports in April - May 2016 of US$568 million. However statistics from APEDA indicate the unit value of buffalo meat fell from US$3,147 per tonne to US$2,887 per tonne, a drop of 8%. Unit values have been falling each reporting year since 2013-14 and unit values are now down in the leading export market of Vietnam from US$3,425 per tonne in 2013-2014 to US$3293 in 2015-2016 reporting period. Overall volumes also fell in 2015-2016 to  1,314,158  tonnes, down from 1,475,526 tonnes  in 2014-2015. All market unit value in 2015-2016 was US$3,096 per tonne. Vietnam and Saudi Arabia are higher value markets and clearly very important to India and APEDA has announced a visit of the Indian Prime Minister to Vietnam next month. Indonesia has approved import of Indian buffalo but there is some resistance by Indonesian cattle producers concerned with quarantine, biosecurity issues.

USA lamb retail performance impressive - Australian lamb arrivals up 19%.

The US Beef Board publishes detailed sales and volume figures on a monthly basis and the 12 months figures to June 2016 are now available on the Beef Board site.

Annual retail sales of lamb amounted to US$407 million in 2015-2016 year ended June, a rise of 4.7%. Volume of lamb sold in the 12 months to June was 57.3 million lbs (25,990 tonnes), a jump of a healthy 6.7%. These are retail sales scan data sourced from FreshLook data, categorized by the VMMEAT® SystemFive Weeks Ending 06/26/16. The USA lamb market continues to perform better than remainder of the meat category including beef, pork, chicken and turkey. There was a 1.6% drop in the average lamb retail price to US$7.10 per lb, with the average retail price well in excess of beef, pork and chicken at retail. Beef average price was US$5.06 per lb. Australia exported over 53,000 tonnes of lamb to USA in the 12 months to June 2016. Australia has done particularly well in relation to lamb arrivals in USA and up to week 31 2016, tonnage equaled 34,070 tonnes, 19% higher than the same period in 2015. Australian lamb is now almost 2.5 times greater in volume of arrivals in USA year to date compared to New Zealand lamb and accounts for 73% of total imported lamb arrivals.

OECD FAO sheepmeat imports projections

The OECD FAO projections released in July 2016 includes a focus on meat. The data visualization above shows the size of the world sheep meat market by regions. (OECD (2016), "Meat", in OECD-FAO Agricultural Outlook 2016-2025, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/agr_outlook-2016-10-en) The projections indicate the rise in developing countries sheep meat consumption compared to production in those countries. The differential is projected to rise to 817,000 tonnes carcase weight by 2025. This is an additional 174,000 tonnes. Per capita sheep meat consumption by selected countries and regions are provided in a spreadsheet.

Paraguay Chile meat export update

Chile has been a major market for Paraguay exports.

USDA FAS report in March 2016 notes: Chile’s beef imports come mainly from Mercosur countries (Argentina, Brazil, Paraguay and Uruguay). In CY2015 beef exports prices from Mercosur countries were 8% lower than 2014, Paraguay had the lowest price from these countries and the highest reduction in price (11%). This price reduction has to do mainly with lower prices paid by Russia (major beef destination from Mercosur), Chile and Brazil. Paraguay was the main supplier of beef, but had an outbreak of “food and mouth disease” on “2011” which lowered its participation on Chilean Market; Paraguay has been recovering since then and has regained its position as the main beef supplier for Chile. Brazilian beef exports to Chile have been favored by a high depreciation of their currency (Reais). In January 2016, Chilean total imports of beef were 11.5% higher over January 2015, which breakdowns to 32.2 % increase from Paraguay, 4.7% increase from Brazil and a 5.1% increase from Argentina (based on ODEPA 2016 statistics). Chile data indicates Jan-June 2016 value of fresh chilled boneless beef imports were valued at $346 million, slightly above the previous year.

Australia ships a small quantity of beef and beef offals to Chile

USDA FAS reports Paraguayan beef exports in 2016 are forecast 435,000 tons carcass weight equivalent (cwe). This record is expected as a result of increased beef output and a steady foreign demand. Paraguay continues to expand cattle grain feeding taking advantage of low feed costs and high cattle prices in dollar terms. Domestic consumption in 2016 is projected at 187,000 tons cwe, marginally higher than the past few years. Paraguayans are increasingly demanding higher quality beef cuts. The EU resumed imports in May 2015. The World Beef Report recently reported Paraguay steer prices lower than the Mercosur average and shown at US$2.76 kg carcase weight.

Australian meat export price index trends

Australian meat export prices surged over 47 index points throughout 2013 and 2014 to their peak of 147.8 in the September quarter 2015. Prices have corrected since that time with a loss of 17 index points and almost 10 points lost between Dec quarter 2015 and June quarter 2016. Today's release of the ABS trade figures for June 2016 saw beef export values for the year ended June drop to $8.5 billion AUD, down 6% from the fiscal year ended June 2015. Volume and values have contracted but export meat prices remain at historically high levels.

History of the Russian ban on Australian meat

Australian Department of Agriculture meat notice 2014-05 confirmed the relevant ban which excludes sheepmeat, goatmeat and offals of those species. The ban has been extended and total beef exports to CIS (Russia) as recently as the fiscal year ended June 2013 were 24.372 tonnes. The Russian publication TASS reported analysts estimate losses of Western countries from sanctions at $60.2 bln. Australia has managed to continue to supply quantities of sheepmeat, goatmeat and relevant offals. Year to June 2016 figures below.

Exports of sheepmeat to Russia in the fiscal year to June 2016 are less than half the level of 6,088 tonnes to CIS for year end June 2013. A publication estimates the losses to a range of supplying countries of the EU. A Reuters article last week indicated Russia in efforts to remove sanctions imposed by the EU.