Strenghening demand for hides, meat and bone meal and higher-valued offal cuts pushed the co-product value of cattle up strongly in December, according to Meat & Livestock Australia.

Each month MLA calculates the potential value of co-products produced from a grassfed heavy steer (average 331 kilogram carcase weight) based on hide, MBM, tallow and offal price movements.

In December the value of co-products for its indicator steer was 198.98/head, 18pc higher than the figure in December 2011.

Beef offal prices during December rose 1pc on November and 4pc year-on-year, averaging $62.20/head.

MLA said prices were generally static across most items with the previous month; however the higher valued items, such as tongue and liver improved overall values.

The average price for Meat and Bone Meal (MBM) during December improved 23pc on the corresponding period last year, although they were 3% lower than November 2012.

Prices were reportedly impacted from the previous month by tight margins in Indonesian poultry production, which is where premium prices can be received.

Firm palm stearine supplies and weak demand from China placed strong pressure on tallow prices, resulting in a 26% year-on-year decline, averaging $48.12/head.

Reportedly reduced hide supplies from the US has led to an increase in interest for Australian product from Chinese and Southeast Asian buyers. The average December price was $53.75/head, up 4pc from November and 25pc year-on-year.

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.