Home NewsAustralia Cattle prices have recorded a big drop, so why are steaks still so expensive?

Cattle prices have recorded a big drop, so why are steaks still so expensive?

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Cattle prices have recorded a big drop, so why are steaks still so expensive?

Customers are unlikely to see cheaper steaks on the butcher anytime quickly regardless of a close to 40 per cent drop in beef costs in Australia. 

Meat costs have been rising since 2020, as a consequence of skyrocketing cattle costs through the pandemic.

The Japanese Younger Cattle Indicator (EYCI), which tracks younger cattle costs, hit a document 1,191 cents per kilogram in January final 12 months however has now fallen to about 700 cents per kilogram. 

NAB economist Phin Ziebell stated there have been a number of components behind the value drop, together with an oversupply of cattle in Australia.

“What’s occurred is, we had the drought, we had the herd rebuild, the herd rebuild is finished,” Mr Ziebell stated.

“We have had these actually nice three years, three moist years. And now there are massive will increase in numbers of younger cattle that coming to market.”

Mr Ziebell stated elevated slaughter charges in the US and a scarcity of capability at Australian abattoirs had additionally pressured costs down. 

Finish of meals inflation?

Mr Ziebell stated the value drop signalled a attainable finish to continued meals inflation. 

“We have come off highs, we’re nonetheless method larger than we have been pre-COVID, so this isn’t pointing to declines again to the previous world,” he stated.

“However it’s suggesting that the massive peak that we had has handed, and we’re now seeing some downsides.”

However he stated it was unlikely these financial savings could be handed onto shoppers, with ongoing issues with provide chains and labour including to prices.

“[Beef] has been a particular deal with for shoppers more and more,” Mr Ziebell stated.

“Dropping wholesale costs, when it comes to your weekly grocery store, except you are an enormous carnivore, is unlikely to be one thing which materially eases your scenario.

“Actually from a client degree, these value declines are one thing that’s good for them, however at a producer degree sadly the other applies. It is a zero-sum recreation.”

A young man wearing a plaid suit jacket over a blue shirt
Phin Ziebell says shoppers are unlikely to profit from the falls in wholesale beef costs.(ABC Information: Patrick Rocca)

Dalby enterprise proprietor Elisha Beil stated she had but to see any main drop to beef costs at her butchery.

“There is a very slight fluctuation from week to week however with the growing value of every thing else, we simply maintain absorbing it,” Ms Beil stated.

“When one thing actually goes up, you have to modify [prices] by [something like] $1/kg … simply to just be sure you’re paying wages and masking all prices.”

Ms Beil, who bought direct from beef producers throughout the Western Downs, stated prospects have been understanding of why costs have been nonetheless so excessive.

“They know we have now to cost what we have now to cost or else we would not be right here,” she stated.

“And it is not a profitable enterprise, butchering, however you’ve got simply received to make a bit bit.”

Steaks on a tray with a price tag
Ongoing points with labour and provide chains is retaining beef costs excessive.(ABC Southern Queensland: David Chen)

Bidding slowdown

For cattle agent Brendan Gilliland, there was a marked distinction on the Dalby cattle gross sales.

“Final 12 months, as an agent, if you stood up on the catwalk as an auctioneer to promote your cattle, the gang was 10 deep and all people was bidding profusely. They have been scrambling to purchase cattle,” he stated.

Cattle auctioneers standing on a walkway
The Japanese Younger Cattle Indicator has dropped about 40 per cent over the previous 9 months.(ABC Southern Queensland: David Chen)

Mr Gilliland stated the value drop had already began consuming into the earnings of farming households.

“They’ve had two or three good years, however we all know what farming is like,” he stated.

“Very often lots of these revenue margins get used up shortly, so to see that the final six or eight or 10 months has form of gone round for not lots of revenue is making issues arduous.”

Darling Downs beef producer Marty Body stated many within the trade had been caught off-guard by the timing of the market correction.

A farmer wearing a blue shirt and a wide-brimmed hat
Marty Body says folks have been stunned by the timing of the value correction within the cattle market.(ABC Southern Queensland: David Chen)

He stated the current dry climate was additionally placing additional strain on producers to promote their cattle. 

“They don’t seem to be correctly panicking but, however I believe they’re prepared to tug the set off,” Mr Body stated.

“We simply received to maintain plugging alongside. We simply will not have as a lot cash on the finish of the 12 months to spend on stuff, however we’ll come out the opposite facet.”

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