Beef offal prices up but hides tumble

Beef offal prices up but hides tumble

Beef
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China, Italy tannery shutdowns hit hide market hard

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BEEF offal prices have firmed in line with increased demand for lower-value red meat products on the back of pandemic food insecurities but the hide and skin market has taken a thrashing.

With the world's largest tanneries in China and Italy in shutdown, inventory is building - not only from Australia but the United States and Brazil - with no obvious market on the horizon, market consultant Dennis King said.

The April co-product market report prepared for Meat & Livestock Australia shows some smaller hides are of no commercial value.

Heavy Victorian hides are back 22 per cent year-on-year, while tick-free Queensland hides are back 84pc.

Mr King said it was likely the May report would show some hide categories at zero value.

The hide market had been in serious decline for several years as a result of the rise in synthetics in fashion products, particularly shoes, and a lack of demand form the automotive and furniture industries.

It had, however, started to show a slight uptick just before Christmas - and then news of coronavirus hit.

While ports are slowly coming back online in China, the backlog of hides and skins sitting on wharves since the end of last year would take months, if not years, to dissipate, skin suppliers believe.

Mr King said it was at least fortunate this had occurred during winter in China, allowing for a longer shelf life.

He said Australian hides would likely be supplied at a loss for some time.

Tightening cattle supply, expected to exacerbate during winter, would only ease the pressure slightly. Australia produces around 8m hides a year but is still a small supplier globally and our competitors also have massive volumes of hides to offload.

Mr King agreed processors would need to pay less for a carcase overall to factor in the losses from hides.

There has, however, been some balancing with offal prices up across a range of products.

Kidneys traded up 200pc on a month ago, averaging $3 a kilogram, which Mr King described as quite a remarkable price.

Liver prices averaged $1.58/kg, 16c up month-on-month and 54c above year-ago levels.

Cheek meat was $2.56/kg dearer than year-ago levels, averaging $7.73kg, which was 85c/kg up from last month.

Omasum firmed 77c/kg from last month, to average $7.70/kg, up 97c from year-ago prices. Halal in particular was strong, more than a dollar firmer year-on-year.

Halal tripe pieces also traded stronger from February to average $3.68/kg, up 18c.

"Food demand is still there and offal should stay strong, being a lower-cost item apart from a few categories like tongue, which has quite a specific market anyway," Mr King said.

Rendered meal prices also firmed on improved demand. The price for 50pc protein meat and bone meal was up $27 a tonne from last month, averaging $510/t, which was $70 above March 2019 levels.

Blood meal averaged $925/t, up $41/t with last year's price and $117/t firmer month-on-month.

Improved prices for meat and bone meal, which goes into stockfeed for pork, chicken and aquaculture, reflects the strong demand for animal protein in general during the coronavirus crisis.

Mr King believes this market could pick up even more as China starts to rebuild its pig herd following the decimation of African swine fever, however Australian supply is limited by the number of plants accredited to supply China.

ALSO IN BEEF: How tech can help meet changing red meat consumer demands.

The story Beef offal prices up but hides tumble first appeared on Farm Online.

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