in this article<\/a>) is being seen right across the product spectrum, from trimmings used for hamburger beef to premium chilled grilling cuts, and it\u2019s pushing domestic wholesale pricing sharply higher as the year has progressed.<\/p>\nConsumer tipping point?<\/p>\n
One wholesaler shared concerns about a potential \u2018tipping point\u2019 in wholesale beef prices, that could trigger a serious drop-off in consumer demand for beef this summer.<\/p>\n
\u201cWe haven\u2019t yet found that point, but it may be close,\u201d he said yesterday. \u2018I honestly think it\u2019s there, even now.\u201d<\/p>\n
\u201cThe biggest issues is that 100,000 head of cattle that\u2019s been stripped out of the US fed cattle kill each week, as the US beef herd hits 70-year lows. It\u2019s dragging meat out of other markets \u2013 including the Australian domestic market \u2013 at ever-higher prices.\u201d<\/p>\n
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Highly marbled Rangers Valley bistecca being prepared for service at Sydney\u2019s Otto restaurant<\/p>\n
\u201cIn our business, we\u2019re not seeing the lift in demand for beef that we should normally be seeing mid-October, for the holiday period. We\u2019re probably 50 tonnes a week short of what we should normally be doing, at this time of year.\u201d<\/p>\n
\u201cEverybody\u2019s just a little bit slower. It doesn\u2019t take much for a restaurateur to change his menu, if price pressure gets too heavy \u2013 and this is when they\u2019re likely to change it, in the next month, leading into the busy Christmas period.\u201d<\/p>\n
\u201cThat might mean swapping-out a steak item for another chicken or pork dish, or pulling off a cube-roll (rib eye) steak for a centre-cut rump.\u201d<\/p>\n
\u201cPork and chicken prices are still reasonably attractive, but beef and lamb prices are getting ridiculous,\u201d the wholesale trader said.<\/p>\n
\u201cThere\u2019s pockets of unusual export demand that are leaving a void in the domestic market, and that\u2019s being reflected in price.\u201d<\/p>\n
Wholesale quotes<\/p>\n
Due to export pressure, domestic wholesale prices on some beef items have gone up another 10-15 percent over the past six weeks, one trade contact said.<\/p>\n
In any domestic wholesale market price summary, it\u2019s always best to start with trimmings, because mince is the most direct equivalent to chicken \u2013 in terms of versatility of use and price.<\/p>\n
The enormous shortage that now exists in the US for lean trimmings is pulling domestic wholesale prices ever-higher.<\/p>\n
Record high trimmings<\/p>\n
One large Brisbane-based wholesaler said depending on location, type and timing, an 85CL trim pack could this week make anywhere from $9.80\/kg to $12\/kg, with 90\u2019s anywhere from $11 to $12\/kg.<\/p>\n
That\u2019s record high for domestic hamburger beef \u2013 up at least $1\/kg compared with this time last year \u2013 perhaps only equalled for short periods during the COVID panic-driven shortage era.<\/p>\n
It\u2019s pushed the ground beef versus boneless chicken competitive equation further apart \u2013 despite the fact that wholesale chicken price has lifted a little over the past six weeks. Chicken fillets sold wholesale \u201cin decent licks\u201d this week are making \u201cevery bit of $8.50-$9\/kg,\u201d one trader told Beef Central.<\/p>\n
Chilled cuts<\/p>\n
For good quality chilled meat, grainfed striploins have gone from $17-$18\/kg to the low-to-mid 20s and a little better this week, with cube rolls ranging from budget cow lines around $18-$23\/kg, middle of the range $28-$35\/kg, and quality marbling score 2 and better grainfeds now $42-$45\/kg, wholesale. Premium cube rolls with brand identity are now trading in the 50s.<\/p>\n
Striploins growing in popularity<\/p>\n
\u201cThe price difference between striploins and cube rolls of the same quality has put some extra demand pressure on striploins, as customers look for a little extra value,\u201d another wholesaler said.<\/p>\n
\u201cMore people have figured out that a striploin is a pretty good piece of meat, and doesn\u2019t eat that differently than a rib-eye steak. It\u2019s certainly appearing on a few more menus, to save a few dollars on raw material costs,\u201d he said.<\/p>\n
\u201cVictoria is different \u2013 they\u2019ve always liked a porterhouse\/striploin, but it\u2019s not the same everywhere. But venues everywhere are being squeezed on raw material cost, and they\u2019re just trying to get a bit back. Nobody is \u2018specialling\u2019 a cube roll on their menu any more \u2013 the plate cost just doesn\u2019t work.\u201d<\/p>\n
Budget cow rumps this week are making anywhere from $12-$16\/kg, with better descriptions from PR, YP and YG now under heavy demand from $20\/kg and higher, especially for breaking down into component parts, with rostbiffs and rump caps becoming trendy.<\/p>\n
Guessing game<\/p>\n
With ten weeks until Christmas plant shutdowns, domestic wholesalers have having to try to speculate about mid-summer beef demand, in the absence of forward orders, Beef Central was told.<\/p>\n
\u201cIt\u2019s a real guessing game for us at the moment,\u201d another wholesaler contact said.<\/p>\n
\u201cCan the market pay $16-$19\/kg for better rumps over summer? That\u2019s what we need, given the current export pressure, but the answer is we still don\u2019t know,\u201d he said.<\/p>\n
\u201cBut even now, bargain-hunting is becoming more obvious at retail among everyday consumers. It is totally price driven, and we see a rush after our specials of the day go up on Facebook.\u201d<\/p>\n
The Australian food service sector in general saw a bit of a lift in demand during September (often aligned with parties and events around footie final season), but had since slowed up again, the wholesaler said.<\/p>\n
\u201cThere will inevitably be a certain amount of Christmas party and holiday spending heading into December, but it\u2019s after New Year when the demand pressure is likely to get really tight. February is notorious, with school fees, Christmas presents and holidays to pay for,\u201d he said.<\/p>\n
Another wholesaler said some of his clients already had their forward positions secured, with a \u2018fair bit of export meat\u2019 already forward sold for January and into February.<\/p>\n
\u201cWith many plants now only nine or ten weeks from Christmas closure, what\u2019s done is pretty well done,\u201d he said.<\/p>\n
\u201cMuch of what happens from here (price-wise) will depend on what Coles and Woolworths do. If they need to fill a hole due to Christmas demand, the domestic market will likely rise further \u2013 otherwise it\u2019s likely to track along where it is.<\/p>\n
\u201cProcessors have plenty of other options in the export market, and that\u2019s not likely to change any time soon.\u201d<\/p>\n
\u201cDomestic pricing at this level is just going to squeeze the margins of retailers more than anything \u2013 everywhere from Colesworth to the local corner butcher. They just won\u2019t pass on the cost.\u201d<\/p>\n
For example Woolworths is retailing 1kg packs of standard beef mince (82cl) this week at $13\/kg, suggesting there is little margin involved, when grinding, packaging, storage and distribution are involved. Leaner (90cl) packs are $18\/kg, and smaller 500g pack sizes look a little healthier, margin-wise.<\/p>\n
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<\/a>\u201cThey appear concerned about some push-back from consumers about beef and lamb prices, which might translate into softer demand,\u201d one large multi-site, multi-state wholesale manager said.<\/p>\n