Goats lose ground

After maintaining an upward trajectory for the most part of four years, over-the-hook goat indicators have found a new, and considerably lower, level in August.

At the beginning of 2014, over-the-hook goat indicators averaged just over $2.00/kg cwt. This was the start of a prolonged period of steady growth for the Australian goat market, with direct-to-works indicators increasing at an average rate of 3% per month for the next four years.

Come 2017, goats commanded more than $6.00/kg cwt direct-to-works, and indicators reached a high of $6.83/kg cwt in early July.

With the majority of Australian goatmeat destined for overseas markets, the growth has been largely underpinned by demand outstripping supply. Australia’s largest and most valuable goatmeat export destination is the US – where increasing consumption is largely related to a growing Hispanic, Muslim, Caribbean and Chinese populations. Around half the goatmeat consumed in the US is imported from Australia.

For much of 2015 and 2016, the Australian dollar traded in the low to mid-70US¢ range – assisting export returns. Since June, however, the A$ has strengthened against the US$. After briefly breaking through the 80US¢ mark at the start of August, it has hovered around 79US¢ for the remainder of the month to date – its highest level since May 2015.  

The rising A$ has led to a considerable correction in Australian over-the-hook goat indicators – averaging 457¢/kg cwt this week (ending 25 August).

The number of goats processed across the eastern states in the first three weeks of August averaged 38,500 head per week, up 14% on the previous month, and 23% from August 2016 – largely due to relatively high kill numbers at the beginning of the month. Last week (ending 18 August), eastern states goat slaughter fell 36% week-on-week, to 27,900 head.

Goatmeat exports for the first 17 days of August (as reported by DAWR) were 1,259 tonnes swt – with volumes to the US accounting for 52%. Between January and July 2017, however, the US has had an average market share of 72% per month.

With the A$ remaining strong, this is likely to maintain downward pressure on goat over-the-hook indicators in the short term. Nevertheless, increased investment in the industry, along with growing demand globally, should continue to support the market as it finds a new level.