A gourmet offal salad.DEMAND for high-value beef offal like tongue and skirt is holding strong in lucrative markets such as Japan, driven by the Korean barbecue trend.
As prices for Australian product are pushed up by high cattle procurement costs, exporters appear to have been able to retain volumes to the higher-end offal markets.
Tongue prices are up 122.5 per cent year-on-year and thickskirt nearly 50pc, according to Meat and Livestock Australia’s latest co-product market report.
Tallow prices also gained ground.
At an average $878 per tonne ex-works for one per cent free fatty acid, tallow prices are up 29.1pc year-on-year.
However, across the range of non red meat parts, price variability is high, with year-on-year decreases of around 20pc for lungs, some tripe categories and beef lips. Sheep runners are also back by 73pc.
Beef exporters and market analysts said while the tight cattle supply in Australia was having some impact, it was international market conditions that determined prices for co-products.
Australian offal competes with the United States and Brazil in most markets and their prices and foreign exchange rates often determine how much residual demand comes to Australia, one processor said.
Report author Dennis King, Southern Downs Management Services in Queensland, said a large percentage of Australian tallow went to the renewable diesel refinery Neste in Singapore, where it competes with other products such as palm oil.
“Palm oil volumes are down due to drought in the big palm plantation nations, which has seen Neste shift more to tallow,” he said.
“These prices are strong but not records – just two years ago tallow was trading at $1000/t.”
Meat and bone meal prices have jumped from earlier this year but are steady year-on-year.
Demand from Indonesia has increased as a result of changes to import regulations but 60 per cent of MBM is sold domestically.
Lamb MBM is used in pet food and cattle MBM in poultry and pig feed.
“Demand is strong in line with growing poultry consumption, however the fact other protein sources such as soybean meal are favourably priced at the moment is having a balancing effect,” Mr King said.
Cattle hides are also stable, with NSW small yearling hides averaging $25.67 per hide, Queensland $25 and Victoria $28.
“The fall-off in the Australian dollar has kept domestic prices steady,” Mr King said.
“It has been the saviour for our farmers and processors as demand from our major market, China, has been under pressure.
“Hides in China are mostly used in furniture and the automotive industry and that type of discretionary spending is the first to go in an economic downturn.
“We are hoping the annual Shanghai Leatherfare at the end of August will spark increased demand.”
Overseas buyers savvyAUSTRALIAN offal competes with the United States and Brazil in most markets and their prices and foreign exchange rates determine how much residual demand comes to Australia, beef exporters say.
Co-products account for around 11 per cent of a slaughtered animal and have an estimated value of $1.7 billion per annum.
Australian offal used to make beef lip tacos in Mexico.
Meat and Livestock Australia says around 80 per cent of Australia’s offal is exported around the world, with Japan the single largest overseas market.
It’s latest co-products market report shows that beef offal prices have increased, while sheep offal is steady.
Export sales manager with NH Foods, which exports to more than 34 countries, Andrew McDonald said demand for tongue in Japan was on a steady upward curve.
“It is a traditional entree item and menus label it Australian product,” he said.
“Australia has a strong reputation for clean, green and safe product.
“Because supply has fallen away, we are now very close to the price point where these customers may shift to other suppliers.”
Mr McDonald said overseas customers were attentive to news of supply in Australia and had looked to ensure they secured inventory, which had seen some offal categories double in price since the start of the year.
Another major exporter said offal price movement was similar to beef price movement with export drivers determining prices based on competitor activity, market access rules and foreign exchange rates.
He listed new demand from Indonesia and the loss of the Russian market as the larger impacts in the co-products market in recent years.
New import rules for Mexico should see Australia benefit from more direct trade in the future, he said.
This story Administrator ready to work first appeared on Nanjing Night Net.