Stronger tallow and offal prices underpinned a 10 percent increase in year-on-year co-product values during October, Meat & Livestock Australia has reported.

MLA estimates the potential value of co-products such as hides, tallows, offals and meat and bone meal produced by grassfed Japanese steers every month. Co-product values can have a significant bearing on overall returns for livestock, accounting for as much as 25pc of the saleyard value of some cattle according to MLA.

Potential co-product values for a grassfed Japanese steer, averaging 331kg carcase weight, were estimated to total $225.14/head during October.

That is 10pc higher than October last year.

While both MBM 50 (meat and bone meal) and hide values averaged lower than the same period last year, the year-on-year increase was driven by higher tallow and offal values.

Tallow values were 12pc higher than October 2010 to average $65.99/head. Fuelling the higher prices was firm domestic demand for tallow in southern states for use in oleochemical (chemical compounds derived from animal fats) and bio-diesel production.

A 22pc rise in offal prices to $91.03/head was attributed to the combination of the lower value of the A$ at the beginning of the month and strong seasonal demand, particularly from Japan and Hong Kong.

MBM 50 values were calculated at $25.88/head, 2pc lower than 12 months ago. MLA said export demand from China for meat meal remained strong, however, and was expected to continue in November.

MLA’s NLRS reported that retail and wholesale demand through October for leather was slow as global leather stocks increased due to higher production levels in Australia.

This increased production is forecast to continue throughout November and into December, which is expected to place further pressure on hide prices (MLA’S NLRS). Subsequently, 281–350 kg hide prices were 16pc below September and 4pc below last year, at $42.25/head.