News

Supermarket forward contracts winding back, in line with broader cattle market

Jon Condon 27/10/2023

 

THERE have been some substantial declines in domestic supermarket grainfed cattle supply forward contracts in recent months, tracking the general deterioration of the cattle market.

Forward contracts for Woolworths and Coles suppliers for December delivery are around 630-650c/kg, Beef Central has been told be people close to the trade.

Contracts have not yet been offered for January, but speculation is that they will be considerably lower – some are anticipating around 600c/kg.

Forward contracts on all cattle – both export and domestic – have evidently been slow to materialise in recent months, as supply chains have been wary about committing to prices too far forward that may end up looking expensive, in a falling cattle market.

For example one large export grainfed supply chain in Queensland evidently filled its limited February requirements quickly earlier this month, having been offered only to regular suppliers, Beef Central was told.

Domestic supermarket forward contract prices paid for 60-70 day grainfed slaughter cattle have fallen comprehensively over the past 12-18 months, in line with the broader industry trend.

The highest point we could find in earlier Beef Central reports was back in February, 2022, when we quoted Woolworths paying contract-holders around 1005-1010c/kg carcase weight for typical 70-day steers for May 2022 delivery, and Coles, around 1030c/kg for HGP-free, vendor-bred cattle, depending on location.

That suggests a drop of 360c/kg or 36pc on a typical Woolworths steer over the succeeding 20 months.

Even by March this year, Beef Central was reporting supermarket forward contracts for May-June delivery on grain yearling steers at a little over 800c/kg on Coles’ no-HGP grid, and a little under 800c for Woolworths, where implants are permitted.

That’s a seven-month drop of around 150c/kg or around 19pc – nowhere near as severe as the broader cattle market has experienced.

Retail price movements keeping pace?

So how have Woolworths and Coles everyday retail prices changed over the same timeframe?

Here’s a quick summary of Coles and Woolworths retail prices for several popular items as of yesterday (26.10.23), versus prices reported in earlier Beef Central retail market summaries in September, April and March this year, plus June and February last year.

Prices were taken from both in-store visits (Brisbane CBD) plus both supermarkets’ online shopping platforms (identical pricing to in-store shopping). The prices are for everyday items (not items listed as specials, unless specified). Some items carried cheaper prices for bulk purchase.

Readers can draw their own conclusions about price adjustments on these staple items, in the face of dramatic movement in cattle prices.

Thursday – 26.10.23

Woolworths: regular beef mince (82cl) 500g pack $13/kg (down from $14/kg since 1 September); rump $28/kg; scotch fillet $41.50/kg (online pricing says $47/kg); porterhouse $40.

Coles: 3-star mince (83CL) 500g $13/kg (down from $14/kg in august); rump $24/kg (on special, down from $30/kg); Scotch fillet $41.67/kg; porterhouse $40/kg

Friday 1.9.23

Woolworths: Regular beef mince (1kg buy) reduced to $12/kg (price unavailable for 500g pack); rump steak $32/kg; scotch fillet $41.50/kg

Coles: Regular beef mince 1kg packs down from $12 to $11 (500g packs still equivalent of $13/kg); Scotch fillet $41.67/kg.

Thursday 13.4.23

Woolworths: regular mince $13/kg, scotch fillet $43/kg.

Coles: Regular mince 1kg pack $12 (down from $13 under a three-month ‘dropped and locked’ commitment)

Tuesday 28.3.23

Woolworths: Regular mince (83CL) $14/kg, lean mince $19/kg; scotch fillet $43/kg

Coles: Scotch fillet $43.75/kg

Wednesday 1.3.23

Woolworths: 82CL mince $14/kg, down from $16/kg back in July 2022; rump $28/kg, porterhouse $43/kg

Coles: Regular beef mince on special for $13/kg, with an $11/kg deal on two packs or more; rump $28/kg, porterhouse $40/kg.

February 22:

Product shortages were apparent in both supermarkets due to COVID.

Woolworths: Mince unavailable; rump $30/kg; scotch fillet $43/kg.

Coles: Regular mince $13/kg, rump $33.30/kg; scotch fillet at $43/kg.

June 2021:

(Listed products limited due to COVID lockdown impact)

Woolworths: lean mince $15/kg (regular unavailable); porterhouse $37/kg and scotch fillet (on special) $37/kg (normally $41/kg).

Coles: Four-star lean mince (regular unavailable) $15/kg, scotch fillet $41.20-$42.50/kg, porterhouse $37/kg.

 

 

 

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Comments

  1. Ray Johnstone, 19/01/2024

    I’m interested in a forward contract to deliver beef steers . Thanks Ray

  2. JOHN ANGUS REEVE, 29/10/2023

    In the US, they mandate price reporting to allow for transparency – it also allows for price risk management and long term physical offtake relationships. Given Australia’s climate variability and 70% export dependence, there should definitely be more industry and government resources allocated to price data and appropriate sharing of this data to allow for a more trustworthy and sustainable industry.

  3. Val Dyer, 27/10/2023

    Beef Central, being influenced in ‘talking the price down’ ?

    Soooo… does that also mean Beef Central was ‘talking the market UP’ when we reported supermarket contracts above 1000c/kg carcase weight last year? How about when the EYCI went past 1100c/kg liveweight last November? To selectively choose not to report pricing – either at the high-points in the cycle, or the low-points – would be derelict in our responsibility to our readers, Val. The market is the market – shooting the messenger won’t help. Editor

  4. Peter F Dunn, 27/10/2023

    I plead guilty to cherry picking the data, but two figures appear to tell the whole story.
    The February 2022 contract prices ranged above the dollar (1005-1030/kg carcase weight) for supermarket specific varieties, but eventually fell to 630-650/kg for delivery this December.
    The consumer price for Scotch Fillet was $40-41 in June 2021, and the price was maintained in that range, or marginally higher, up until this month.
    So, no correlation whatsoever, and tellingly, no consumer watchdog organisation presenting comparable graphs (happy to be corrected).
    Obviously, this market abuse will continue, because people get away with what they are ALLOWED to get away with, and the multi-national supermarkets will continue to be ALLOWED to get away with it, until we vote in a government with the ticker to challenge it.
    Sadly, I am not holding my breath.

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