Trade

Wholesale outlook: A$ helps avoid a major glut on domestic market

Jon Condon 09/07/2013

Australia's softer currency has helped greatly in averting the risk of big volumes of export beef failing to find a home, and ending up back on the domestic market, wholesale sector sources said yesterday.

Had the A$ still been above US103c as it was six weeks ago, the situation could have looked a lot worse by now, with stocks likely to have risen to a much higher level, a large wholesaler with operations in three states told Beef Central.

Nevertheless, some grilling cuts have shown a big seasonal decline in price recently, with grainfed cube-rolls probably the worst affected. That’s fairly normal for this time of year, as consumers replace barbecues with slow cookers.

Grainfed cube rolls have fallen from earlier levels around $18/kg wholesale down to $14-$15, and as low as $13/kg in places, one domestic stakeholder said. Prices at the lower end of that scale are likely to be for product that ‘has a bit of age on it,’ and is pushing up against use-by dates, Beef Central was told.

The grainfed meat segment appears to be the worst affected, driven by the large volumes of 70-100 day grainfed cattle that went onto feed earlier in the year, due to drought.

Other grilling cuts like striploins, rumps and eye fillets have softened also, but are not as badly impacted as cubes, apparently.

There has been some take-up from the US and Japan for striploins, while rumps have come back a little in price, but have basically held their own. Grainfed rumps are still sitting at around $6/$6.20/kg, but at times in the past have got as low as $5/kg at this time of year.

One of the developments that has protected winter rump prices a little has been the penetration into South America for Australian rump caps (known locally as picanha), and to some extent, the rump rostbiff muscle.

Trade sources say a lot more domestic portion-cutters are now also seaming-out  the better rump muscles for food service use, because the price and yield are so much better than other steak options like tenderloin, strips or cubes.

China has also played a strong role in averting a more serious build-up of beef on the domestic market during recent extreme high beef production.

“China has been terrific in soaking up a lot of that additional supply in recent months,” a large wholesaler said. “It has turned into a real competitive presence in the market, taking product that would otherwise have gone into the US or Japan, which both remain very flat.”

“It puts a little more backbone in the market, and gives market participants a bit of confidence going forward,” he said. 

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