Domestic beef market shows resilience

20 Sep, 2016 02:00 AM

THE SOLID price performance of the domestic market was helping offset challenging conditions in the export job, according to beef processors.

“This is one group of customers that can’t ring South America,” one processor said.

However, pork and chicken was continuing to extend volume dominance over beef in local butcher shops and on supermarket shelves and that was a big concern to the beef industry long-term, they said.

David Foote, chief executive officer of Australian Country Choice (ACC), the sixth largest beef processor by volume in Australia and exclusive supplier to Coles, said the domestic market remained a strong customer of Australian beef production and to date had shown more resilience to increasing prices than the global market.

“Market commentary is, however, indicating that growth in volume in the category has at best stalled, most likely reduced, as carcase prices climb closer to the $6 per kilo mark,” he said.

“While beef has remained on the family menu, a shift away from the higher value steak cuts to lesser cuts and mince is apparent.”

Mr Foote said beef would hold its leading spot on the customer preference list while ever it could continue to show value for money, meal versatility and deliver on the expectations of the consumer.

He said the strong values in the live cattle market at the moment reflected the amount of restocker and beef farmer trading rather than consumer demand or buying patterns for beef cuts.

On the global scene, things remained very competitive, with increased supply available from the major beef-producing countries combining with a firm Australian dollar. according to Mr Foote.

ACC exports over 40m kilograms of meat products to more than 23 countries each year.

“Australian beef is holding its market share in the major quality markets of Asia and Europe but is under constant price pressure with little market upside on the horizon,” he said.

“Australia’s traditional long-held northern Asian markets remain relatively loyal and stable in terms of demand, however all are sensitive to price volatility, with these markets having a strong impact on future export values and subsequent farmgate returns.

“The USA market for trimmings is down eight per cent in value from the start of the year but down more than 20pc from one year ago, with increased competition from local and south American products.”

Mr Foote said Brazil had, in one season, taken the number one export position in the China market from Australia - a clear indication of the price sensitivity of that market.

“The opening of the Indonesian market to bovine products from India will also put further downward price pressure on the traditional Australian beef item sold into this market,” he said.

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Shan Goodwin

Shan Goodwin

is the national beef writer for Fairfax Agricultural Media.


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