Low livestock prices linked to cool room supplies

The chillers are full and prices are low. But what does this dynamic mean at a market level?

Meat in cold storage has become the latest industry topic linked to depressed livestock prices, overshadowing earlier talk around workplace labour and kill capacity.

Data on frozen meat is collected in countries like Japan and the USA, indicating a build-up or backlog after consumer demand dropped as the world economy slowed.

The graphic on this page shows the trend line for beef held in storage in Japan, and it has spiked to the highest levels seen for more than a decade. At the end of June, 30 per cent more beef was in cold storage compared to a year ago.

The backlog of meat appears problematic across Asia, although no official data is readily available for major markets like China. However, The Weekly Times understands industry bodies like Meat and Livestock Australia are attempting to build a more accurate picture of what is happening in this country, which has become an integral driver of red meat sales across the globe.

It is not just beef supposedly caught up in the meat backlog.

This anecdote was related by a major exporter when discussing lamb. He said his people on the ground had told them there was the lamb that landed in China last October that had only been released into the wholesale/retail market in the past few weeks.

He said the issue was two-fold. It was meat that had to be moved, but it was also higher priced than what was currently available, so importers were pushing new stock values lower as they used it to shandy down the stored meat cost.

Now, proving the accuracy of this statement is problematic. But then, I walked into the Yea saleyards and caught up with a Melbourne-based boning room operator. He talked of the “shortage’’ of cold storage in Victoria and difficulty getting access to blast freezing (a method to quickly take boxed meat down to freezing temperatures suitable for shipping).

Then, this week, a lamb processor mentioned how they could do more light frozen lamb out of one of their Victorian plants but are limited to one load a week due to restricted blast freezing.

Consolidated Meat Group's Lakes Creek Meatworks in Rockhampton. Picture: Cameron Laird

On top of this, stories emerged in other rural media this week about bulk meat being sold at discounted warehouse-type butcher chains – meat coming out of cold storage initially destined for export.

Altogether, there is enough anecdotal evidence to suggest that the backlog of meat in cold storage in Australia and in key importing countries is a significant problem for the livestock industry.

One exporter described the situation as being like a ‘traffic jam’. As more stock was processed, the product was bumping up against meat already being held in storage as it was being slowed down by soft demand from overseas as importers in other nations tried to clear their frozen product.

On a positive note, market analysts such as the Steiner Group believe the worst of the stockpiling is behind the beef sector, and they are forecasting stockpiles in places like Japan to be much lower in the coming months.

There are some positive signs on the world stage for cattle, and the vibe is that beef could have a quicker recovery from the current downturn in price compared to lamb and mutton.