Weaner calf prices dip even further due to Covid-19 related lackluster demand.
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Retail and Business Bank
28 April 2020
Agri Trends: Livestock and Hide Report
Weaner calf prices dip even further due
to Covid-19 related lackluster demand. Wessel Lemmer
+27 12 366 6854
+27 71 354 2948
Wessel.Lemmer@absa.africa
Beef: Local beef prices have been under pressure due to current lockdown restrictions. These
are times of uncertainty and many feedlots are not buying the volumes of weaner calves they Conce Moraba
usually do due to the uncertainty about the overall direction of prices in the coming months. +27 11 846 6242
Farmer’s not being able to sell their livestock creates not only a cash flow problem , but also +27 64 756 5766
Khomotso.Moraba@absa.co.za
creates a logistical backup as they may not have physical space for new feeder cattle that
were intended to replace the cattle that could not be sold. Unlike other commodities that can www.absa.co.za
simply be stored, animals continuously need to be fed and taken care of therefore creating
https://www.absa.co.za/business/sector-
ongoing expenses for producers, especially with the current higher maize and soybean prices.
solutions/agribusiness/agri-smart-insights/
Pork: The local pork prices traded negatively this week. The average porker price is 7.1%
lower from at R21.08/kg, while the average baconer price declined by 4.9% at R20.77/kg.
Pork prices locally have been declining on end, with some regions recording prices between
R15-16/kg for porkers and baconers. The decline in prices is driven by lack of demand during
the quiet buying period of the lockdown. Seasonally, April would be a month were prices
increased however, this year that is not the case.
Poultry: The ongoing depreciation of the Rand strength against major global currencies is
going to affect the local consumer price of imported poultry. Poultry stocks are piling up and
capacities are tight. Some market players have reported that their stocks are piling up in
outside storage, while others are reporting adding some select cuts into IQF products just to
keep products moving. Seasonally the March-April months is a high consumption period,
which supports prices, in 2020, however that is not the case. Egg prices however have been
underpinned by higher consumer demand.
Disclaimer: Although everything has been done to ensure the accuracy of the information, Absa Bank takes
no responsibility for actions or losses that might occur due to the use of this information.ABSA | Agri Trends: Livestock and Hide Report
Agri Trends
Beef Market Trends
International Beef Market
Prices in the international beef market traded mostly positive this week. The price of topside,
rump, striploin, chuck and brisket increased by 13.4%, 32.0%, 33.0%, 14.6 and 8.3% week on
week. Cattle prices have been volatile but overall down in March.
China and Canada are increasingly picking up their beef import requirements from New Zealand.
The first round of meat shortages in the United States over the last month were short-term and
driven primarily by a massive spike in demand. However, this current drop in production due to
closures of protein processing plants will likely create supply shortages, as high consumer
demand will outstrip reduced production.
US Beef US Beef Rump US Striploin US Beef Chuck US Brisket US Beef Carcass NZ Steer NZ Cows
Topside US$/cwt US$/cwt US$/cwt US$/cwt Equivalent
US$/cwt US$/cwt NZ c/kg NZ c/kg
Price 301 223 638 327 184 330 472 321
w/w 13.4% 32.0% 33.0% 14.6% 8.3% 20.4% -1.9% -1.8%
m/m 22.6% -21.8% 17.2% 45.9% -18.3% 14.0% -2.7% -3.6%
y/y 35.2% -34.4% -12.0% 43.4% -29.2% -2.9% -11.4% -14.2%
Local Beef Market
Week on week, beef prices were lower in the different classes. The average Class A price
decreased by 2.43% to R44.63/kg and Class C prices moved 2.4% lower to R38.47/kg week on
week. Local beef prices have been under pressure due to current lockdown restrictions. These
are times of uncertainty and many feedlots are not buying the volumes of weaner calves they
usually do due to the uncertainty about the overall direction of prices in the coming months.
Farmer’s not being able to sell their livestock creates not only a cash flow problem , but also
creates a logistical backup as they may not have physical space for new feeder cattle/ weaner
calves that were intended to replace the animals that were not sold.
R/US$ R/NZ$ Class A Class C Beef contract Weaner calf NZ Cows AMIE carcass
price (includes (R/kg) Carcass import parity
(R/kg) (R/kg) hides) equivalent 0-1 price for beef
mm trimmings
(R/kg) (R/kg)
(R/kg)
Price 18.71 11.20 44.63 38.47 44.75 26.50 62.61 74.00
w/w 2.4% 2.2% -2.43% -2.4% -2.4% -9.2% 0.4% 0.0%
m/m 10.4% 13.0% -5.4% -7.7% -5.4% -15.3% 8.9% 9.8%
y/y 33.3% 18.8% 0.8% 1.1% 0.6% -6.9% 2.0% 29.8%
28 April 2020 2ABSA | Agri Trends: Livestock and Hide Report
Beef Price Trends (R/kg)
AMIE Import parity price (R/kg)
50.00 80
Outlook
Local beef prices (R/kg)
47.00
44.00
60 Globally, in the near term, strong retail demand continues to
41.00
38.00 underpin the beef price. For the beef sector, an immediate impact
35.00 40 could be reduced demand, or at least a shift to less expensive cuts,
32.00
29.00 during the important summer grilling season.
20
26.00
23.00 Locally we might see a slight increase in demand this week as we
20.00 0 are heading towards month end. Muslim nations worldwide will
Jul-19
Nov-19
Jun-19
Aug-19
Sep-19
Mar-20
Jun-20
Apr-19
Oct-19
Dec-19
Jan-20
Feb-20
Apr-20
May-19
May-20
not be consuming any beef from the end of April as the month-long
Ramadan observation begins.
Class A Class C
Weaner calf AMIE carcass import parity price
*Last 3 points 3 months forecast
28 April 2020 3ABSA | Agri Trends: Livestock and Hide Report
Sheep Market Trends
International Sheep Meat Market
The international price of lambs and ewes decreased by 2.9% and 2.3% respectively week on
week. The price of mutton ribs decreased by 5.4% while the price of mutton shoulders remained
unchanged week on week. The New Zealand lamb export market has managed to hold stable
during the crisis. However, there are select cuts that were reliant on restaurants that cannot be
sold. French racks are very tough to sell now, the US market is sitting with a lot of lamb product
in cold storage and it seems quite unlikely that the US will work through the stock before Q4 of
2020. The European and the UK lamb market on the other hand seems to be moving freely. The
slow recovery from China is on track, with minimal changes in prices observed.
NZ Lamb Price NZ Ewe Price Import Parity Import Parity NZ Mutton Ribs NZ Mutton
(NZ$/kg) (NZ$/kg) NZ Lamb NZ Ewe (R/kg) Shoulders
(R/kg) (R/kg) (R/kg)
Price 6.58 4.3 82.52 58.49 44.44 68
w/w -2.9% -2.3% -0.5% 0.3% -5.4% 0.0%
m/m -4.6% 1.5% 8.3% 11.5% -5.7% -2.2%
y/y -6.0% -13.1% 12.6% 5.4% 35.0% 18.7%
Local Sheep Meat Market
This week, lamb and mutton prices traded lower when compared to the previous week. The
national average Class A carcass lamb price decreased by 2.4% to R72.45/kg and the average
Class C carcass price decreased by 2.5% to R51.82/kg. The price of merino skins decreased from
R42.22/skin to R41.25/skin this week and the Dorper skin price increased from R35.63/skin to
R39.38/skin week on week. Compared to a year ago the price of dorper skins is 21.17% higher
and the price of merino skins is 3.19% lower.
R/NZ$ Class A Class C Feeder Lamb Dorper Skin Slaughtering
(R/kg) (R/kg) (R/kg) (R/skin)
Price 11.20 72.45 51.82 34.00 39.38 8985
w/w 2.2% -2.4% -2.5% 1.0% 10.5% -17.9%
m/m 13.0% -5.4% -3.5% 2.1% 12.3% -28.7%
y/y 18.8% 13.9% 6.4% 1.2% 21.2% -23.4%
Outlook
Lamb and Mutton Price Trends (R/kg) Demand for red meat in China has been affected because of
Local lamb and mutton price (R/kg)
85 55 movement restrictions designed to control the spread of
80
AMIE imported ribs price
75 the virus. Some supply chain disruptions remain in China
70 50
65 due to labour shortages. The Coronavirus situation has led
60
55 to global pricing volatility and uncertainty in the markets.
50 45
45
40 Locally, lamb and mutton prices remain subdued due to the
35 40
30 availability of cheaper protein alternatives. Prices are
25
20
35 expected to trade sideways to lower according to
15
10 seasonality.
5
0 30
Jul-19
Jun-19
Sep-19
Dec-19
Jan-20
Jun-20
Apr-19
Aug-19
Oct-19
Nov-19
Feb-20
Apr-20
May-19
Mar-20
May-20
Lamb Class A Class C AMIE Ribs- Aus/NZ
*Last 3 points 3 months forecast
28 April 2020 4ABSA | Agri Trends: Livestock and Hide Report
Pork Market Trends
International Pork Market
The international pork market traded mostly positive this week with the US pork carcass price,
US loin price, US rib price and US ham prices higher by 9.1%, 4.9%, 7.4% and 16.9% respectively
week on week. The import parity price for pork ribs increased by 8.5% and the import parity
price of ham increased by 12.2% week on week. The closure of one of the US’s largest pork
processing plants combined with the closure of other protein processing plants is a major threat
to the country’s ability to supply grocery stores if the supply chain is disrupted.
US Pork Carcass US Loin US Rib US Ham US Import Parity US Import Parity
Price (US$/cwt) (US$/cwt) (US$/cwt) Rib Ham
(US$/cwt) (R/kg) (R/kg)
Price 59.15 91.77 105.53 36.95 62.37 29.04
w/w 9.1% 4.9% 7.4% 16.9% 8.5% 12.2%
m/m -25.1% 3.8% -34.9% -29.9% -23.1% -12.1%
y/y -31.1% 22.0% -28.5% -42.2% 0.8% -7.1%
Local Pork Market
The local pork prices traded negatively this week. The average porker price is 7.1% lower from
at R21.08/kg, while the average baconer price declined by 4.9% at R20.77/kg. Pork prices
locally have been declining on end, with some regions recording prices between R15-16/kg for
porkers and baconers. The decline in prices is driven by lack of demand during the quiet buying
period of the lockdown. Seasonally, April would be a month were prices increased however, this
year that is not the case. Unlike other commodities that can simply be stored, animals
continuously need to be cared for and fed, creating an ongoing expense for producers, especially
with the current higher maize and soybean prices.
R/US$ RMAA Slaughter Nr Contract Average Porker Baconer AMIE Loin
(R/kg) (R/kg) (R/kg) (R/kg)
Price 18.71 26830 20.93 21.08 20.77 58.00
w/w 2.4% -4.6% -6.0% -7.1% -4.9% 0.0%
m/m 10.4% -13.6% -9.5% -9.6% -9.4% 23.2%
y/y 33.3% 5.6% -2.5% -3.1% -2.0% 41.5%
Pork Price Trends (R/kg) Outlook
50 62
AMIE imported loin price (R/kg)
Local pork price (R/kg)
45 China’s pork supply gap driven by ASF losses and depressed
57
productivity from Covid-19 far outstrips available global supply
40
52 which will result in persistent high prices.
35
47 Locally pork prices are expected to follow other protein prices, which
30
42 in the near term is downwards due to constrained consumer demand
25 and closures of food service industries. Locally, pork products remain
20 37 a cheaper alternative to beef and lamb. If animals are not sold, the
15 32 supply of slaughter-ready, heavyweight animals will weigh on prices.
Jul-19
Jun-19
Aug-19
Sep-19
Apr-19
Nov-19
Dec-19
Jan-20
Jun-20
Oct-19
Mar-20
May-19
Apr-20
Feb-20
May-20
Porker Baconer
Import Parity Ham US AMIE loin b/in Can/US
*Last 3 points 3 months forecast
28 April 2020 5ABSA | Agri Trends: Livestock and Hide Report
Poultry Market Trends
International Poultry Market
The international poultry prices were mixed this week. The price of US whole birds and breasts
decreased by 1.1% and 25.3 % respectively week on week. The price of fresh MDM and frozen
MDM increased by 4.5% and 0.3% week on week. Compared to a year ago the price of US whole
birds is 48.5% lower while the price of US chicken breasts are 46.4% lower. The poultry sector,
even more essential than ever has not gone unscathed. Livestock and poultry processing plants’
labor force have been affected by the coronavirus, which could lead to beef, pork and poultry
shortages in US grocery stores. In the UK, one of the world’s largest storage facilities is piling up.
Inbound volumes are far exceeding outbound volumes.
China’s poultry meat production, consumption and imports are forecast to increase in 2020 due
to the massive pork supply gap caused by ASF. The growth however in all three respective
categories aforementioned will be constrained by recovering pork production in China,
production and transportation slowdowns in China caused by Covid-19 and the consumer’s
willingness to switch from pork to chicken.
US Whole Bird US Breasts US MDM Fresh US MDM Frozen US Leg Quarters EU Leg Quarters
(US$/lb.) (US$/lb.) (US$/lb.) (US$/lb.) (R/kg) (R/kg)
Price 50.00 59.00 24.85 26.83 21.85 30.77
w/w -1.0% -25.3% 4.5% 0.3% 1.7% 2.6%
m/m -42.9% -52.8% 12.6% 0.3% 9.1% -2.2%
y/y -48.5% -46.4% 9.2% -1.7% 11.8% 13.4%
Local Poultry Market
The average poultry prices were lower this past week. The average price for frozen birds
decreased by 2.3% at R25.54/kg, the average prices for fresh whole birds decreased by 4.2% at
R25.24/kg and IQF poultry prices were lower by 4.1% at 22.86/kg week on week. The ongoing
depreciation of the Rand strength against major global currencies is going to affect the local
consumer price of imported poultry. Poultry stocks are piling up and capacities are tight. Some
market players have reported that their stocks are piling up in outside storage, while others are
reporting adding some select cuts into IQF products just to keep products moving. Seasonally
the March-April months is a high consumption period, which supports prices, in 2020, however
that is not the case. Egg prices however have been underpinned by higher consumer demand.
SA Whole Bird, SA Whole Bird, SA Individually US Whole Bird US Breasts
R/US$ Frozen Fresh Quick Frozen Import Parity Import Parity
(R/kg) (R/kg) (R/kg) (R/kg) (R/kg)
Price 18.71 25.54 25.24 22.86 34.79 29.46
w/w 2.4% -2.3% -4.2% -4.1% 1.0% -20.1%
m/m 10.4% -5.1% -8.8% -6.7% -25.2% -42.8%
y/y 33.3% 0.9% -4.2% -6.4% -19.8% -23.2%
28 April 2020 6ABSA | Agri Trends: Livestock and Hide Report
Outlook
Poultry Price Trends (R/kg)
30 39 Based on normal trade patterns, the height of China’s meat and
AMIE imported EU chicken leg quarters
29 poultry imports generally peak in the last quarter of the year. The
Local poultry prices (R/kg)
37
28 coronavirus may have a minimal effect on import totals, however if
35 the ongoing outbreaks worldwide may exacerbate trade disruptions.
27
26 33 Many restrictions have been rolled back but the industry is still not
25 31 yet up to speed.
(R/kg)
24 29
23 Poultry demand could benefit among other proteins, due to its price
27 competitiveness.
22
21 25
20 23
Local producers that primarily provide poultry products in the
franchise businesses such as KFC, Nandos, Chicken Licken etc. will
Jul-19
Jun-19
Aug-19
Sep-19
Jun-20
Apr-19
Oct-19
Nov-19
Dec-19
Jan-20
May-19
Mar-20
Apr-20
Feb-20
May-20
be under pressure during this lockdown. The occurrence of bird flu
is some of the major importing EU countries, will reduce imports into
Whole Frozen Whole Fresh the country. The largest coronavirus related issues will be the
IQF EU Chicken Leg Quarters potential supply and demand shocks, driven by the national
*Last 3 points 3 months forecast
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