Retail beef price finds ceiling

Retail beef price finds ceiling


Commercial
In September, the retail beef price was 256pc above the NTS which was marginally lower than the record set in March this year and basically the same as September 2017. This means the price of retail beef was roughly two and a half time more expensive than the average saleyard price of trade steers.

In September, the retail beef price was 256pc above the NTS which was marginally lower than the record set in March this year and basically the same as September 2017. This means the price of retail beef was roughly two and a half time more expensive than the average saleyard price of trade steers.

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Retailers have clawed back some of the margins they lost thanks to the dramatic rise in cattle prices.

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Finished cattle prices have remained strong relative to store markets over the last year or so, however, not to the peaks we saw during the heady days of 2016.

So, we’d expect beef to have become cheaper at the retail level, right?  

Wrong. But there are reasons why retail beef prices haven’t followed cattle prices lower.  

The Australian Bureau of Agricultural Sciences and Economics (ABARES) latest retail beef price reports that prices improved in September, moving 0.07pc higher to $19.31/kg.

Retail beef prices have been remarkably steady since breaking through $19/kg back in March 2016.  

The spread between the retail beef price and the National Trade Steer (NTS) gives a very broad indication of how retailers are faring with beef margins.  

While the retail beef premium over the NTS has risen from the lows of 185pc premium back in September 16, it is still well below the historical range of 300-400pc.  

What does it mean?

Retailers have clawed back some of the margins they lost thanks to the dramatic rise in cattle prices.  

Now that consumers are comfortable with the new higher levels, retailers are unlikely to lower beef prices while margins are still historically tight.

With retail beef prices seemingly hitting a ceiling, it will help limit upside in cattle prices. While export markets are the main driver of cattle prices, the domestic market is the single biggest destination.

Retail lamb prices could also have some way to rise, given the more expensive stock.

This should underpin beef prices as consumers substitute red meats.

The story Retail beef price finds ceiling first appeared on Farm Online.

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