Domestic market awash with beef as exports prove tough going

Jon Condon, 28/06/2023

LAST weekend in Brisbane, it was possible to buy whole cryovaced 100-day grainfed certified Angus rumps, with an attractive pack-date of late April, for just $12.99/kg.

It’s been five years, at least, since quality beef has been that cheap.

$12.99/kg 100-day Angus rumps fort sale in Brisbane last weekend. Ignoren the references to pack date and use-by: they are pre-sets in the outlet’s labelling system for fresh tray wraps.

So why is some meat on the domestic market suddenly looking cheap again?

There’s a glut of product evidently in domestic cold storage at present, as trading conditions into international export markets has become increasingly difficult during June, meat traders and wholesalers have told Beef Central.

As referenced in this story late last week, product out of Australia and South America is building up in cold storage and on ships waiting to unload in key export markets like China, Korea and Japan.

Much of that is due to the economic slow-down in many importing economies, with consumers reining-in spending on beef and other discretionary items due to rising cost of living, interest rates, and general unease about the state of their economies.

“There’s just too much meat in the system for the domestic market to absorb,” a contact with one of Australia’s largest domestic wholesale networks told Beef Central yesterday.

“It’s been a wild ride,” he said.

“Grill cuts always go off the boil during winter, but not like this. It’s as hard as it has ever been, with prices (virtually all cuts) going back to 2017-18 values, in many cases,” he said.

He said it was very difficult to give a clear picture of the market for selected cuts at present.

“It’s all over the place, because everybody’s expectations are different. I’m seeing rumps (ranging from cows rumps to good 100-day steer) anywhere between $7 and $12/kg, at wholesale, depending on the article.

“The premium end is still looking for $16/kg for marbling score 2-3 Angus type rumps, but good luck with that (in finding a buyer).”

Rumps often suffer a mid-winter slump in domestic demand as consumers put the barbecue in the shed, but this year has been particularly tough on rumps, Beef Central was told. Some examples had fallen anywhere from $2/kg to $5/kg, with $3/kg drops common.

Supermarket specials

Not surprisingly, large domestic supermarket traders have followed suit with attractive rump specials recently.

In the green corner, Woolworths was offering a rump special last week, with sliced everyday rump selling for $17.50/kg, down from $19.60 (saving of $2.10) from $25/kg.  and smaller packs of beef rump steak 250g for $7 ($28/kg) down from $8 this time a month ago.

In the red corner, Coles also had a rump special last week, offering its HGP-free sliced rump (packs a little less than 1kg in weight) for the equivalent of $24/kg, down from $25/kg. Confusingly for consumers, it claims the price of an 832g pack at $19.97 is a saving of $4.99. The smaller packs around 500g were being sold for $12 (down from $15), at $24/kg.

Other loin cuts are also being impacted, and slow-cook secondary cuts like briskets that normally flew out the door at this time of year were slow, also, trade sources said.

“Everything is being affected, not just BBQ cuts,” one wholesaler said, “and higher kills over the past few weeks are only adding to the burden.”

Trade sources say both national supermarket groups have a backlog of forward-bought supply that now exceeds mid-winter retail demand.

Manufacturing meat also impacted

Prices for beef trimmings (used for grinding beef) are currently described as ‘hard down’ on the domestic wholesale market, following the same trend seen in exports.

Beef Central’s home page dashboard graphs show 90CL imported grinding beef into the US has fallen about A80c/kg over the past two months, a drop of 10pc.

Lean trimmings on the domestic market currently are down $2/kg on where they sat only a couple of months ago, with 85CL trading at $9/kg to $9.50/kg cryovac, trading today at $7 to $7.25/kg. Frozen 85s are currently as low as $6.50/kg, one trader said.

“To be frank, nobody really knows where the price of meat is currently on the domestic market, and we think it still has a way to go,” he said.

Asked whether there was any evidence of chilled product in storage running into pack-date problems, one trader said it was starting to clean up as owners accepted lower prices, but there were still some issues with pockets of meat going long into their use-by cycle.

“People holding meat don’t want to realise losses, but the problem is, it’s getting worse,” he said.

Cold storage volume was now uncomfortably high.

China particularly difficult

In the export sector, beef trade into China is described by traders as particularly difficult, with containers being held up “like there’s no tomorrow.” Large volumes of South American meat was also being caught up in the delays, and in storage.

“It’s just ugly,” one export meat trader said yesterday.

“Even smaller markets like Indonesia have gone to sleep. We can’t even get a bid out of Indonesia this week.”

“Part of that is customers watching meat prices fall in Australia, and not wanting to commit too early, taking the view it might be cheaper next week. The Japanese and Koreans and other do their homework on Australia, and know what’s going on.”

“They want to be as current as possible in the current market conditions.”

US seen as best prospect for turnaround

Of all markets, the US was identified by trade sources as the mostly likely source of encouragement.

“We’re seeing reasonable demand out of the US at present, with US domestic production now back 5pc for the year, compared with 2022. But at the same time, trim sales into the US have been disappointing, because they are still killing plenty of cows and have plentiful fresh domestic grinding meat.

“There’s a big price spread now between imported and domestic grinding beef. That will slip at some stage, but at the moment, people in the US are more prepared to pay spot money in the US than take a gamble on a forward price, for three months’ time. Nobody wants to get left with product that might look more expensive later, so a lot of US customers are hand-to-mouth, at present.”

“But exporters are now really starting to look at the third and fourth quarters for some real growth in demand in the US, as the impact of herd rebuilding starts after drought.”

“There will be less beef available in the US domestic supply as the year goes on, but at the same time the US economy is also struggling at present.”

“But China, Korea and Southeast Asia have been spotty, at best, with a lot of good inventory building up in Korea, with the domestic Hanwoo industry liquidating its herd.”

“There’s just so many influences presently in each export market. It’s hard to get a handle on it,” one trader said.

“But there’s certainly plenty of ‘budget meat’ being thrown around the Australian domestic market at present, which hasn’t happened for a few years.”

“Some of the larger retailers that are a bit more dynamic in their response to market conditions, like IGA, are coming out with very attractive specials on rumps and striploins, especially.”

Export interest rekindles, at lower prices

“Rumps have clearly been the toughest item to shift. But prices have now gotten down to levels where the export trade is starting to get interested again,” the trader said.

“But we’ve had to take a lot of money off them, to get to that position.”

“Everybody is acutely aware of the need to stay current. Nobody wants old meat (pushing up against pack date pressures) around them, and we work hard not to get to that point.”

“But given the dollars that have now been stripped off those rump and loin cuts, we are definitely getting to levels where the export customers are showing interest again.”

“If it continues, domestic could start to tidy up heading into September. When that happens, they will go from having a heap of old meat, to having no meat – but that’s down the track a way yet.”





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  1. Tori apelt, 04/07/2023

    The reason beef isn’t moving in the shops is because Coles and Woolworths aren’t dropping there price to the consumer. There screwing the grower down every week. Keeping the shop price the same and holding up supply. The problem is caused by there greed.

  2. Dale Knuth, 28/06/2023

    Top price for bullocks in the north is less than $3 per kg live weight – and yet retail prices are still sky high. Why ?

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