As we move into the fourth month since the Coronavirus was declared a pandemic, we are beginning to see some data on domestic meat production and price. Attributing impacts to the pandemic and subsequent panic buying is difficult, but we can look at the numbers in search of some trends.

Last week the Australian Bureau of Statistics released cattle slaughter and beef production data for April. At first glance, there is little to say COVID-19 has had any impact. Cattle slaughter was up marginally on 2019, and down on last month, but that is usually the case in April, with public holidays decreasing slaughter days.

However, look a little closer and there might be some evidence of some panic selling. Due to the good season, February and March cattle slaughter was down 8% and 10% respectively, figure 1 shows in April it was up 2%.

Cattle carcase weights also usually fall in April, with more cast for age Cows coming onto the market.  In theory, there should be fewer of them this year, yet we still saw average carcase weights fall 1.8%.  Not far from the average of 1.5% but in 2019 cascase weights from March to April were steady.

The demand from supermarkets was where all the talk was back in March and April, with beef, especially low-value beef, flying off the shelves. We now have evidence to back this up. 

April beef production was down on March, yet exports held relatively steady. Domestic beef utilization (a proxy for consumption) was lower in April than March. However, compared to last year, domestic utilization was up 56% on April 2019 and accounted for 25% of production, compared to 16.5% in April 2019.

There is some overlap of months when working out domestic consumption. Obviously a lag exists from when beef is produced, to when it is exported or consumed domestically, best illustrated by the very low figure for December and high figure for January.

As for price, we now have retail values for the March quarter and it has moved as would be expected with increased demand at the retail level. The March quarter saw a new record for retail beef values, with prices jumping 3.5% to $22.03/kg. 

What does it mean?

We will have to wait some time for June quarter retail prices, but the upward trend, combined with increasing domestic utilization compared to last year, points towards increasing domestic demand.  This, along with tight cattle supply, is helping cattle prices maintain highs despite issues moving higher value cuts. 

There remains a risk of weakening domestic demand with stimulus measures cutting out, with plenty hanging on the resumption of foodservice both at home and in major export markets.

Have any questions or comments?

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Key Points

  • Data is starting to appear on how the pandemic has impacted cattle supply and beef demand.
  • There may have been some extra selling in April, with producers offloading stock to avoid price downside.
  • Domestic beef prices were higher in March and consumption much higher year on year in April, indicating stronger domestic demand.

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: MLA, Mecardo

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