THE Australian beef producer’s share of retail dollar spend on beef has moved higher over the past three months, now tracking closer to the long term average after hitting record lows in the December quarter last year.
The recent release of September quarterly Consumer Price Index data from the Australian Bureau of Statistics provides the opportunity to update the quarterly producer share of retail dollar calculation (see details below) published jointly by Episode3 and Beef Central.
As can be seen on the graphs above and below, the recent strong gains in saleyard cattle prices during the third quarter has helped improve domestic retail beef market price share for producers, currently sitting at 39pc, up from 35pc in the March and June quarters. However it still sits below the long term trend growth line, as indicated by the dotted line on the chart.
Back in December last year the beef producer share of retail $ dropped to its lowest point since the data-set began back in 1998, at just 25.8pc. That coincided with lower cattle prices, as the market faced a pessimistic weather forecast from BOM for summer, and residual concerns over the prospect of a Lumpy Skin Disease incursion in Australia.
Further back in 2022-23 when cattle prices were at record levels, the producer share index graphed above soared to record highs at almost 60pc.
In the graph above comparing the saleyards cattle price index versus the retail price index (1998 providing the benchmark at 100 for both), the saleyard index has seen some strong gains over the September quarter, after mostly trending sideways for the first half of 2024. The saleyard cattle index lifted 12pc from 352 in Q2 to finish at 395 as at the September quarter.
Retail beef prices are yet to follow the upward trend seen at the saleyard, with the retail beef index increasing by just 3 points between the June and September quarters, from 259 to 262.
Background to the producer share of retail prices calculation
In collaboration with analyst Matt Dalgleish from Episode 3, Beef Central last year launched a new quarterly series looking at trends in the beef producer’s typical share of the retail consumer’s spend on beef products.
A similar analysis was compiled by MLA for four years, before being discontinued by the industry service delivery company back in 2016. The project was originally launched as a result of producer requests during the 2012 MLA annual general meeting.
Beef Central sought, and gained MLA’s support to resurrect the discontinued series, based on clear reader interest. The same formula is used to compile the new set of results as originally used by MLA (see explanation of the calculation below).
Episode 3 and Beef Central now jointly publish a quarterly report, soon after ABS quarterly retail beef price data is released.
The exercise sees national saleyard cattle prices in carcase weight terms being converted into an estimated retail weight equivalent and compared to average retail beef prices, as reported by ABS.
About the producer share of retail spend calculation
The beef producer share of the retail dollar is calculated using a range of assumptions:
- The national saleyard trade steer indicator is used as the benchmark livestock prices, representing animals suited for the domestic market. Livestock prices are collected by MLA’s NLRS.
- Converting the carcase weight price to an estimated retail weight equivalent price is achieved using a retail meat yield for beef of 68.7pc.
- The indicative retail meat prices are calculated by indexing forward actual average beef prices during each quarter, based on meat sub-group indices of the Consumer Price Index, provided by ABS. These indices are based on average retail prices of selected cuts (weighted by expenditure) in state capitals.
The producer share is calculated by dividing the estimated retail weight equivalent livestock price by the indicative retail price.
Click the links below to read earlier reports in this series:
June quarter 2024
March quarter 2024
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