Retail beef prices take a breather

According to the Australian Bureau of Statistics (ABS) and Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) data, June quarter retail beef prices were steady on the January to March period.

At $19.16/kg retail weight (rwt), indicative retail beef prices took a breather after ten consecutive quarters of upward movement – the result of tightening cattle supplies and robust export demand.

Nevertheless, strong competition remains on the domestic market from other cheaper proteins. In the June quarter, indicative retail chicken prices declined 13¢ on the previous quarter and were 28¢ below year ago levels, at $5.31/kg rwt. Over the past decade, retail chicken prices have largely flat-lined while other meat proteins have increased. This largely reflects strong productivity gains in the intensive chicken industry. In fact, over the past four decades, Australian chicken production growth has averaged, fairly consistently, 5% per annum – March quarter 2016 chicken production* was a record 286,631 tonnes cwt (ABS). The weight of ample chicken supplies on the market (which is almost entirely domestically consumed) at present is driving retail prices lower.

At 3.6 in the June quarter, the ratio of retail beef prices to chicken was the highest on records going back to 1970. This reflects a longer term trend; in the 1970s the ratio was 1.0-1.5, in the 1980s it was 1.5-2.0, in the 1990s 2.0-2.5, and from 2000 up until last year it was mostly 2.5-3.0. Increasing chicken supplies have kept retail chicken prices subdued, while growing global demand for high quality Australian beef has maintained pressure on retail beef prices.

Relative to beef, the figure below illustrates growth in Australian chicken production and subsequent cheaper retail prices – a fairly strong correlation.

*June quarter chicken production is due to be released by the ABS tomorrow