While a surging Australian dollar has made life tougher for Australian beef exporters, stronger returns for offal, tallow and hides have helped to cushion some of that impact.
Prices for most offals as well as tallow and hides defied a higher Australian dollar in the January to March quarter to command prices 24-28 percent higher than the same quarter of 2010, according to Meat and Livestock Australia’s latest Co-Products market report.
The report shows that the slump experienced in co-product prices during the global financial crisis has been all but erased with values recovering during the quarter to return to mid-2008 levels.
Potential co-product values for Japanese grassfed steers averaged $243.66 during the March quarter, 28pc higher than the $190.32 average of March 2010.
Co-products from prime steers were 24.3pc higher year-on-year to $195.21 and returns for cows were 24.8pc higher to $139.95.
Beef and veal offal exports totalled 28,384 tonnes during the first three months of 2011, an 8pc increase on the same period in 2010.
In value terms beef and veal offal exports increased by 22pc to total $91 million.
Behind the improved conditions was increased demand from North Asia and Russia, offsetting a fall in offal exports to Indonesia due to import permit restrictions.
Exports to Japan rose by 24pc for the period to 6,105t, while exports to Hong Kong were also significantly higher, rising by 79pc for the period to 4756t, consisting primarily of tripe imports (4646t).
Hong Kong leapfrogged Korea, Indonesia and Russia to become the second largest importer of Australian beef offal products by volume during the period. The MLA report noted that the rise in tripe shipments to Hong Kong was not necessarily for domestic consumption, but could reflect larger trade movements into other countries.
Trends by cut included:
- Beef liver exports rose by 5pc to 5593t swt, with Russia taking 3293t. Prices were 16pc higher to average $1.50/kg
- Thin and thick skirt exports increased by 5pc to 2804t, almost exclusively going to Japan and Korea. Prices were 28pc higher for thin skirt to $4.74/kg and 25pc higher for thick skirt to $4.71/kg.
- Tongue shipments rose by 13pc to 1845t, due largely to the recovering sales performance of Japanese/Korean style barbecue restaurants in Japan during the quarter. The average price was 25pc higher to $12.49/kg, but signs off softening appeared following the earthquake and tsunami.
- Heart exports fell by 6pc overall to 2151t, largely reflecting the cut backs that have occurred in Indonesia. Prices increased by 15pc to $1.57/kg.
- Hide values were boosted by tighter supplies, with cattle slaughter continually held up by rain in the first few months of the year. Prices for 181-220/kg green hide averaged 21pc higher in April than a year earlier. However, the high A$ is reportedly beginning to have a downward effect on prices, and more moderate rates can be expected in coming months.
While the January to March quarter was stronger, the MLA’s recent report for April indicated that the continued high dollar and softer export demand had resulted in a $4.47 to $10.97/head weakening in co-product values across the board.
MLA said in last Friday’s Meat and Livestock Weekly report that some tanners had been prepared to scale back operations at recent higher price levels which had contributed to the weaker trend in April.
Co-product values can have a significant bearing on overall returns for livestock, accounting for as much as 25pc of the saleyard value of some cattle.