Market Synopsis

Weaner calf prices weaken on subdued seasonal demand

Winter is here and cold seasonal conditions have started to curtail demand and prices in the livestock market.

The live market has been particularly hit with weaner calf prices falling modestly towards midmonth as seasonal volumes increased and demand dipped.

Further, says Senior Agricultural Economist at FNB Commercial Paul Makube, average weekly weaner calf prices were still ahead of last year by 6.3% (+R1.87/kg Live weight (LW)).

Average class A beef carcass prices started June on a softer note but were a tad firmer on last year.

“We saw a similar trend in the poultry market which saw declines across all product categories except for the low value category which remained elevated due to the seasonal upswing in demand. Activity on the market has been downbeat, but positive developments are that cost pressures have dissipated with no loadshedding and a decline in fuel prices. Further, raw feed input prices have eased from the recent highs with the Jul-24 yellow maize prices now down by almost 3% m/m and back below R4,000/t which bodes well for profitability in the industry,” explains Mkaube.

He said the pig market was mixed with baconers extending weekly losses towards midmonth while porkers trended a bit firmer. However, Makube says, both porker and baconer prices continued to trend slightly above the 2023 levels for this time of the year.

Internationally, US pork prices extended losses on downturn in demand. Meanwhile, biosecurity remains a challenge globally with the latest being the outbreak of the African Swine Fever (ASF) on a pig breeding farm in Germany. The economist says this is not good news as it may attract import bans as it is the case with China currently.

“On global meat inflation, the last update from the United Nation’s Food and Agriculture Organization (FAO) showed a marginal decrease of 0.2% m/m in May 2024 after trending in positive territory in the prior three consecutive months. Declines in the poultry and bovine meat prices underpinned the decrease in the overall meat index. Meat inflation was down 1.3% y/y in May after steadying in April 2024.

“Although lifting by 1% and 1.7% m/m respectively in May 2024, pig and ovine meat prices remained in deflation mode in 2024 with decreases of 0.9%, and 18.9% y/y (figure 2). Supply tightness amid ASF outbreaks in Europe and the rebound in demand underpinned the recent monthly strength in pig prices,” he said.

Makube states that the overall food price index nudged 0.9% higher m/m but still 3.4% lower y/y in May 2024 with the monthly upward pressure stemming from gains in cereals and dairy product prices.

Softer yellow maize prices bodes well for livestock feeding costs.

Good news is that yellow maize (YMAZ) futures reversed recent gains and trended lower relative to last month. As a major input in livestock feeding, the limited further upside for YMAZ prices bodes well for reducing costs in intensive livestock feeding operations such as poultry, pigs, feedlots.

Farthest futures showed a trend around R4,000/t and have a potential to fall even further as we approach the 2024/25 planting season given the bullish weather outlook with La Niña in the forecasts.

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