The reduction in interest rates last week created positive sentiment in the meat industry as it has a direct positive impact on the disposable income of the market’s consumers. We expect that the extra money now available to the higher LSM groups will increase demand, particularly for sheep and then beef. The rain and better expected grain season also naturally give the meat market a boost now.
As expected, the national average weaner calf price increased, with the price for calves between 200 and 250 kg now at R33.96 per kilogram, with “out-of-hand” sales at R35.26 per kg. Lighter calves under 200 kg also increased to R33.47, while heavier calves over 250 kg are trading at R30.91 per kilogram. The average price in the Free State also increased to R34.59, while the price in Natal is at R32.82 per kilogram. I would like to mention that these are average prices, and the quality, type of animal, and the supply and demand at a specific auction will influence the price.
We also saw that the A2/3 carcass price increased to R53.69, while the C-grade price also increased to R47.82 per kilogram. I think A-grade and C-grade prices could rise further during December, when demand is expected to remain relatively high. I still believe weaner calf prices are now close to a peak for the year, with perhaps a small increase still possible. From mid-January to mid-February, however, the calf price is likely to decrease slightly, but the proper decline will only come in April when our weaning period begins.
In the sheep industry, the national average store lamb price increased by 0.7% and is now at R39.73 per kilogram, with the average slaughter lamb price at R39.37. If we look only at direct sales, the store lamb price is R39.89, with slaughter lambs higher at R40.10. The average store lamb price in the Free State is also higher at R40.54, while the price in the Western Cape dropped to R39.54 per kilogram. From mid-December, lamb prices are expected to decrease again, and it seems that prices could reach a low point by the end of January. After that, lamb prices may pick up again over the first half of the year.
The A2/3 price has continued to decline and is now at R86.76, while the C2/3 price increased to R63.47 per kilogram. After last week’s drop in slaughter prices, it is now looking more difficult for the A-grade prices to reach the R90 mark this year, but they could still rise slightly over the next few weeks.
In the wool market, prices have dropped again, mostly due to the Rand strengthening and also because Australian prices have fallen. The RWS wool is currently at a clean price of R165.30 per kg, while non-RWS wool has dropped to R162.68 per kilogram. In Australia, the average wool price dropped by 0.4% to AUS $11.37 per kilogram. There are currently just enough volumes to balance the weak demand, and prices are mostly moving sideways now. There has been better demand from processors, which is a good sign for better demand. At the 6th auction of the mohair season, the average indicator closed at R336.15 per kilogram, which was about 1% lower than the previous auction. The weaker international demand is also affecting the market, which, despite the weaker Rand, is also dropping.
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Chicken prices are stabilizing, with the frozen ex-abattoir price up by 1.2% to R32.90, while fresh prices are dropping to R34.05, and the IQF price remains steady at R31.25 per kilogram. I feel these prices can maintain current levels for the rest of the year, with the greatest demand for the Christmas market possibly already being something of the past.
There were mixed results in the pork industry last week, with the latest bacon pig price rising to R33.38, the meat pig price dropping to R33.35, while the latest sausage pig price rose to R25.88 per kilogram. As mentioned last week, it seems we are very close to a peak for the year, and prices should remain near current levels until just before Christmas, after which they are expected to drop as we move into the New Year.
The latest large goat price increased last week to R41.07, with small goat prices rising to R61.52, and medium goats at R52.26, but we saw that goat wool prices dropped by about 14% to R48.06 last week. Goat prices may stay steady until January, but traditionally we see a sharp drop in February every year.
In the feed market, the latest average Grade 1 alfalfa price for the producer remained unchanged and is currently at R3,100 per ton. Prime alfalfa is trading at R3,750, while Grade 2 alfalfa is still trading at R2,600 depending on foreign material.
The average chop price increased to R4,900 per ton last week, with talk of prices reaching R5,100 also being possible. However, there is significant resistance to the R5,000 mark in demand, and those feed costs just don’t make sense with the current meat prices.
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