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Higher $A brings goat’s four-year price rise to a halt

Beef Central, August 24, 2017

A steady four-year rise in Australian goat prices has been brought to a sudden and dramatic halt in August by the recent sharp rise in the Australian dollar.

Goat prices have risen from 200c/kg cwt four years ago to a peak of 683c/kg cwt in early July.

However, the impact the rising $A is being blamed for a sudden reversal of prices in August, with over-the-hook goat indicators averaging 457¢/kg cwt this week.

Direct-to-works indicators have increased at an average rate of 3 percent per month for the past four years.

With the majority of Australian goatmeat destined for overseas markets, the growth has been largely underpinned by demand outstripping supply, according to Meat & Livestock Australia.

Australia’s largest and most valuable goatmeat export destination is the US – where increasing consumption is largely related to a growing Hispanic, Muslim, Caribbean and Chinese populations. Around half the goatmeat consumed in the US is imported from Australia.

For much of 2015 and 2016, the Australian dollar traded in the low to mid-70US¢ range – assisting export returns.

Since June, however, the A$ has strengthened against the US$.

After briefly breaking through the 80US¢ mark at the start of August, it has hovered around 79US¢ for the remainder of the month to date – its highest level since May 2015.

The rising A$ has led to a considerable correction in Australian over-the-hook goat indicators – averaging 457¢/kg cwt this week (ending 25 August).

The number of goats processed across the eastern states in the first three weeks of August averaged 38,500 head per week, up 14pc on the previous month, and 23pc from August 2016 – largely due to relatively high kill numbers at the beginning of the month. Last week (ending 18 August), eastern states goat slaughter fell 36pc week-on-week, to 27,900 head.

Goatmeat exports for the first 17 days of August (as reported by DAWR) were 1,259 tonnes swt – with volumes to the US accounting for 52pc. Between January and July 2017, however, the US has had an average market share of 72pc per month.

With the A$ remaining strong, this is likely to maintain downward pressure on goat over-the-hook indicators in the short term.

Nevertheless, MLA predicts, increased investment in the industry, along with growing demand globally, should continue to support the market as it finds a new level.

Source: Meat & Livestock Australia

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  1. Dan Holt, August 25, 2017

    So on that reasoning a roughly 10% appreciation of the AUD equates to a 30% drop in goat price yeah right !

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