Meat prices soared in 2020

Meat prices surged to a new record high for December, underpinned by the resilient seasonal consumer demand and supply contraction.

Favourable production conditions boosted the herd rebuilding process, thus raising the demand for weaner calves, thereby constraining their availability for both the slaughter and feedlot markets. Beef prices reached a historical high above R56/kg and R49/kg for class A and class C grades respectively during December 2021, which is almost 9% and 11% higher than the 2020 levels.

The lamb and mutton categories strengthened to more than R89/kg and R71/kg respectively and further retained their premium above all other meat types.

Globally, the meat price index as measured by the United Nations Food and Agriculture Organisation (FAO) showed a deceleration with a fourth consecutive decline of 0.9% month-on-month in November 2021. Although still elevated at 17.6% year-on-year, the November meat price print was lower than the 20.7% recorded in October.

The dynamics that informed the recent deceleration in global meat prices include the slow Chinese import demand that slashed the international prices of pork, while the increased availability from Oceania, largely Australia, weighed heavily on the sheep meat category.

The beef category, however, was reportedly stable with decreases in values from Brazil more than offset by the stronger Australian prices due to supply tightness.

While producers appreciated the strong meat prices, cost pressures kept on mounting with a surge in fuel and feed costs. Grain prices were unrelenting and continued to push feed costs higher.

The price of raw maize, a major livestock feed ingredient, remained elevated despite the record harvest and the bullish seasonal outlook boosted by the strong La Nina weather pattern.

The nearby March 2022 maize futures for both the white and yellow categories recently topped R3,584/ ton and R3879/ ton respectively, which is 12% and 23% above the 2020 levels.

Nonetheless, consumers can expect a short-term breather early in the New Year as the lower seasonal demand post the December holidays amid higher food, electricity, and transport costs might place downward pressure on meat prices.

Source : Paul Makube, Senior Agricultural Economist at FNB Agri-Business