Why a drop in goat prices is a warning for beef, lamb

Goat prices have fallen and while it’s a tough for producers, it could sound a warning bell for the sheep and cattle industries too.

Goats could be the “canary in the coalmine” when it comes to the fragile balance between supply and demand as meat sales come under pressure from struggling global economies.

Australian goat prices have plummeted this season. From a peak of 920c/kg carcass weight in winter, the price has fallen sharply and has now nearly halved to sit at 485c/kg.

The graph on this page shows the downward spiral, which is based on weekly over-the-hook price surveys by the National Livestock Reporting Service as there is no regular auction market for goats.

The price dive in dollar-per-head terms has taken returns for an 18kg carcass goat from $165 at its peak, down to $87 today.

Goat prices have slipped in the past few weeks, almost halving from their peak.

Multiple factors are to blame for the downturn, and some of the issues put forward by buyers and processors represent “red flags” for other meats as the global economy slows.

Firstly, goat supply did surge this year and the industry has recorded multiple weeks with kill numbers greater than 30,000 – well ahead of 12 months ago.

In late September, the national weekly goat kill was nearly 33,000.

Since then, production has slowed dramatically as producers pulled back from the cheapening market. By late October, the weekly goat kill had plummeted to an annual low of just 7366.

Some industry analysts suggest the downturn for goat was linked to processors shifting more kill space to lamb and sheep (goats share the same processor kill chain, being “smalls”) as the spring flush of ovine started to build.

However this argument is tentative, as historical data shows the goat kill has been able to track through previous springs when sucker numbers have been running.

It seems to come down to money, as processors kill what is most profitable. And the feedback from goat buyers was that the export market into the US, which is where most Australian product goes, had become difficult as consumers looked for cheaper alternatives.

The national goat kill hit 33,000 at its peak but more recently has been less than 10,000.

The Weekly Times was told some key exporters had containers of goat sitting in the US that they had been unable to sell at a profit.

In 2021, the Australian goat industry exported 19,046 tonnes of product, with 66 per cent of this volume sold into the US, according to Meat and Livestock Australia. Most goat goes out as frozen carcass.

Livestock buyers said the goat industry was an early example of the pressure building on the meat market – including beef, lamb and mutton – as consumer spending slowed amid talk of recession.

“We just keep being told to buy stock cheaper as they (exporters) can’t get the money for it at the other end,’’ said one buyer at Bendigo this week.

It was the main issue discussed by noted US market analyst Len Steiner in his latest update of the beef market.

Talking about grinding beef, Mr Steiner said the market was spooked by what was happening on the world stage.

“Talk of an impending recession and prospects for a global slowdown have had a profound psychological impact on buyers and there is little interest to bid on forward loads unless they are at a discount to the current market,’’ he said.

For beef, the markets being watched are China and Asia and the latest figures are not encouraging.

“We continue to hear of a significant slowdown in Chinese demand as a number of major Chinese cities implement Covid-19 containment strategies,’’ he said.

In saleyards in the past week most cattle prices have slipped, with manufacturing steers and export steers and cows among the hardest hit.

Linked to this are big volumes of beef coming out of the US as it continues to record high cattle kills due to drought, with New Zealand also now starting to put more grinding beef into the world market.

It is creating pressure on Australian beef as it tries to compete.

“The increase in slaughter comes as the export environment is showing signs of fraying,’’ Mr Steiner said.

Lamb also had a much tougher week in saleyards, and buyers said the big corrections of $20 to $50, which hit places including Wagga Wagga and Griffith last week, were not only due to a jump in supply but also the fact processors were operating in a very uncertain and volatile marketplace.

“We don’t have a strong baseline of demand and that is feeding into these big price fluctuations,’’ said one exporter.

The Weekly Times was told to expect less forward price activity this summer as processors sat back to see how the export market performed in early 2023.