RECENT international trade and political developments have buffeted offal and other co-product values, with already lacklustre hides hitting new lows.

Tariff wars between the US and China have seen hides values hit hard recently. China is the dominant customer for Australian cattle hides, but once processed into leather in China, those hides now attract a prohibitive tariff when sold for car seats or lounges into the United States.

Cheek meat is a popular slow cook item as the domestic market heads into winter

There’s been a gradual decline in Australian hides values for the past five years, but April trade data compiled by MLA recently suggests prices are down anywhere from 28pc to 61pc on this time last year.

Best quality heavy hides in Victoria were quoted last month at $16.25 each, with lighter Victorian (tick and scratch-free) hides from as low as $1.50 to $8.50. Heavy tick-free Queensland hides were quoted at $5.50, down 43pc on last year, with lighter descriptions $3.25. Queensland ticky hides are virtually unsaleable at less than $2.

“For some descriptions that started the year at $10 in January, they have now lost $2 a month. You only have to look at the math to see they are in negative territory, once processing and handling costs are accounted for,” an offal and by-product trade source said.

“The concern is whether it continues to devalue before it gets better, and whether the teams that are salting or wet-bluing hides can find buyers at all,” he said. “It’s extremely tough at present in the hide space. Most players will grin and bear it for a month, but if there is a sustained trend here, there will be push-back on that lower end quality.”

What happens at the end of the 90-day ‘truce’ between Trump and trading partners like China would have a big bearing on any recovery in hides values, the trade source said.

As this graph shows, all hides values have hit new lows since March. It means more hides, especially in Queensland, are being turned to landfill, rather than being sold for tanning.

Edible offals

In contrast with hides, some edible offals have increased in value this year – partly due to strong demand out of Indonesia and lower rates of beef processing taking place in the United States.

Australia’s total fancy meat (edible offal) exports last month totalled just short of 16,600t. That was a 1700t or 12pc rise on the same month last year. Shipments into the US (somewhat influenced by ethnic populations) have risen 49pc over the same period, as US kills decline.

Heading into winter, certain items like cheekmeat and tails are attracting solid support on the Australian domestic market, trading at very comfortable volumes.

With some fifth quarter prices up and others down, it becomes a complex, composite mix, in terms of overall value. The current ‘cutout’ for the fifth quarter on a typical Queensland/Northern NSW slaughter animal (edible and non edible offals plus hides, tallow & meatmeal) is currently worth around $250, the trade source said.

While some by-products have dropped substantially, the premiums being paid for primals (muscle meat) and trimmings has overshadowed any movements in offal values. In essence, the co-product contribution to the overall value of the animal is currently less impactful than it was earlier, almost regardless of the movement.

A $2/kg rise on chucks and a few other forequarter cuts could easily add another $100 to the value of an animal, offsetting any downside in offal price movements, the trade source said.

Tails, for example, were currently trading in the $16-$18/kg range, while beef liver values have surged in price since January, averaging $2.21/kg in April, up 38pc on this time last year.

Indonesia and Japan (mostly BBQ cuts like tongue and skirt) continue to buy strongly in the export offal market, especially as US production continues to slow.

Head offals have also shown a modest rise, with cheek meat $9.65/kg in April, up 16pc on last year.

Swiss cut tongue averaged $16.52/kg last month, up 73¢/kg from a year ago, reaching their highest level in at least two years. Thick skirt averaged $7.08/kg, $1.75/kg down against last year while thin skirt averaged $6.98/kg down $1.85/kg year-on-year.

While China remains second only to the US in primal and trimmings meat sales, offal trade remains   limited due to Chinese regulation over which items can and cannot be exported.

Foetal blood

Foetal blood, worth as much as $700 a litre this time two years ago, has crashed, now worth only $273/litre. Some beef plants with the ability to harvest foetal blood are no longer doing it, for labour and profitability reasons. Pushback on price from China followed stock buildup, with a substantial decline in demand since the end of COVID. Some countries continue to look at alternatives to foetal blood used in culture work.

Tallow

A lot more Australian beef tallow has been heading into the US this year for the biofuel market. The the price for 1pc FFA tallow averaged $1676/tonne last month, up $365 or 28pc on this time last year, and the best prices seen since late 2023. As the graph below shows, tallow prices tailed off a little last month, due to currency movement and other factors.

Meat and Bone Meal prices have softened this year, now $80/t behind April 2024.

Gallstones, used in oriental medicine, have also come back sharply in price, now worth perhaps two thirds of the highs seen a year or two ago, in line with gold values. Gallstones were being hoarded for a period, used as a proxy for gold in some cultures.