Stanley Vale Merino Stud - News & Views

COVID-19: impacts on markets

The unprecedented and unpredictable nature of COVID-19 makes it very difficult to report on the complete range of impacts to Australian red meat and livestock industry in an accurate and timely manner. COVID-19 cases have been trending down in Australia and in a number of Australia’s key markets (such as Korea, China and Taiwan), however in other regions (South America and the Middle East), cases are surging. As impacts are still felt globally and social distancing restrictions remain, this will continue to disrupt the consumption of Australian red meat, both domestically and internationally.

Here’s a summary of some consistent impacts seen in global markets:

Consumer demand

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China’s red meat imports remain firm despite disruptions

Growing meat imports in recent months as ASF continues to impact the market

China’s monthly beef imports during 2020 reflect the volatility of the first quarter, with a convergence of push and pull factors – Lunar New Year, African Swine Fever (ASF) and COVID-19. China’s March meat imports were the largest monthly volumes ever recorded through customs, with red meat a key driver. However, it should be noted that a reasonable proportion of this product was delayed in arrival by port disruption.

The impact of ASF on China’s pig industry continues to be severe, with sporadic outbreaks continuing to be reported. It remains the key driver of the country’s domestic protein production and protein import demand. Estimates put the impact of ASF as equivalent to having destroyed some 40% of China’s pig herd, with industry recovery likely to take several years.

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COVID-19: impacts on markets

The unprecedented and unpredictable nature of COVID-19 makes it very difficult to report on the complete range of impacts to Australian red meat and livestock industry in an accurate and timely manner. It is clear that even though China appears to be emerging from COVID-19 shutdown, the crisis is continuing across the rest of the world and will continue to disrupt consumption of Australian red meat domestically and internationally. 

Here’s a summary of some consistent impacts seen in global markets:

Red meat supply and logistics (processing, sea freight and air freight)

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US beef prices under unprecedented pressure

Just one month-ago, US markets witnessed the biggest rally in the beef cut-out value (a benchmark indicator of wholesale prices) in history, triggered by an unprecedented surge in retail meat demand as consumer panic buying set in. As discussed in this article two weeks ago, processors responded to price signals and supply ramped up to meet demand. Markets subsequently calmed.

However, now a new panic has set in, as COVID-19 has forced further processing plant closures. Early data suggests US weekly cattle slaughter last week was 29% below the peak five weeks ago and 27% below the same time last year, according to Steiner Consulting. The is a monumental turn around in supply. The supply shortage of product coming through the chain has sparked an even greater rally in the US cut-out value, increasing 46% over the fortnight to Tuesday and making the March rise look like a minor speed bump.

US-choice-beef-value-300420.jpg

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MLA Strategic Plan 2025: The sheep perspective

Consultation with industry is a critical component in the development of MLA’s five-year Strategic Plan. Throughout our strategy development, we have been using different models to ensure we capture the voice of our stakeholders.

In early March, MLA brought together representatives from across the sheep industry supply chain in a workshop to explore their priorities for the next five years, within the context of MLA’s strategic planning co-design framework.

Here is an overview of what they told us were some of their key issues. During the workshop, each of these issues was examined to better understand the problem the sector was trying to solve.

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Impact of Covid-19 – China in focus

The impact of Covid-19 on each country’s red meat market will be shaped by many factors. This  includes underlying ones, such as the degree of dependence on imports and the prominence of red meat in consumer diets, and more immediate ones, such as how virus-spread control measures are implemented and ability of the healthcare system to deal with serious cases.  

Covid-19’s impact in China was compounded by the crisis coinciding with Lunar New Year, typically the peak season for red meat purchases and consumption and when many businesses shut down for 1-2 weeks holiday. Hence, labour shortages across the supply chain due to quarantining, illness and travel bans were compounded by the national holiday.

While the epicentre of Wuhan responded with the deepest and longest shutdown, our insights below refer mostly to the rest of the country, particularly coastal Tier 1 and 2 cities where the vast majority of Australian red meat arrives, is stored, distributed, further processed and consumed.

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Recovering from natural disasters – practical help for livestock producers

Recovery information sessions are being held throughout bushfire and drought-impacted regions to help livestock producers get ‘Back to Business’ following natural disasters.

Focusing on recovery, experts will be on hand to offer practical advice, tools and information on livestock nutrition, water access and quality, mental health support services and accessing financial and government assistance.

Recovery information sessions in NSW are being hosted by Meat & Livestock Australia (MLA), its subsidiary Integrity Systems Company, NSW Department of Primary Industries and NSW Local Land Services with support from industry partners including Dairy Australia, Australian Wool Innovation, and NSW Farmers.

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Sheep and lamb market red hot

Mutton

Despite uncertainty in Australia’s largest mutton export market – China – the impact of dwindling supply, accelerated by the recent rain event, has propelled mutton prices to record levels.

Mutton prices typically peak at the beginning of winter before entering a period of decline in late July, albeit the indicator is often influenced by intermittent rainfall in any given year. Therefore, the recent price increase is perhaps unsurprising. However, the rise comes on the back of already elevated mutton prices, with the indicator on Tuesday 18 February reported at 672¢/kg carcase weight (cwt), a remarkable 255¢ above year-ago levels. The strength of the current market will provide some comfort to producers who opted to retain breeding ewes and supplementary feed in the past year.

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Bushfire emergency - Jason Strong, Managing Director, Meat & Livestock Australia

It has been a devastating start to 2020 for many red meat and livestock producers.

We have witnessed catastrophic bushfires roar through millions of hectares of rural and regional Australia, much of it farm land. The number of people and animals affected, plus the amount of infrastructure and vegetation destroyed is unprecedented.

The thoughts of everyone at MLA - some of who have been directly impacted - are with those who have lost loved ones, property, land and livestock.  

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The year that was

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