ANALYSIS - A weakening Australian dollar against the US dollar is helping to support export prices of by products in Australia.
The Meat and Livestock Association March co-products market report shows that Indonesia has fallen off the radar after stopping the import of offal, with only tails and tongues permitted.
Omasum exports to Hong Kong have continued to improve in price, with honeycomb tripe also back in the picture.
The report shows that meat and bone meal prices, however, have continued to fall and the price for blood meal dropped significantly.
Tallow has now aligned itself well and truly to the palm stearin prices and is following the trends in that market.
“Tallow really is a case of back to the future,” the report says.
“Singapore is taking some tallow for biodiesel production but at much reduced prices.”
Hide prices have improved somewhat, but MLA says that this is expected to be temporary and is only supported by the falling dollar.
The weaker Euro brought European hides into the Asian tannery market, and this has allowed tanners to force the US dollar price for hides down because of the increased competition from sellers.
Head offals, arw showing a strong performance, with firm improvement year-on-year, with cheek meat rising by A$2.74/kg over the March price last year, to an average A$6.56/kg and up A$1.36/kg on last month.
The price of lips fell 50¢/kg, to average A$2.77/kg.
MLA says that exporters are still trying to find new markets for their halal product following the Indonesian ban and a lot of halal product is going to non-halal markets.
Tripe pieces improved by 65¢/kg reaching A$3.87/kg - the highest price seen in some time.
Honeycomb tripe turned around the drop seen last month to get back to the price in January of A$7.45/kg, which is A$2.09/kg up on last year.
Records continue to be broken, with omasum climbing to A$9.12/kg up another 54¢/ kg for the month.
MLA said that non-halal product has now risen A$3.50/kg year-on-year.
Heart products traded steadily in March with non-halal hearts up 6¢/kg on last month and 9¢/kg year-on-year, averaging A$1.54/kg.
Halal hearts mainly ended up in the non-halal market.
Aorta fell slightly again this month to average A$5.41/kg, down 17¢/kg on last month but up 63¢/kg on March last year.
Kidneys slipped 13¢/kg, down to A$1.00/kg in March, but up 16¢/kg on last year.
Non-halal lungs moved 3¢/kg down, to finish at A$1.59, up 50¢/kg on last year, while halal product, also going into the non-halal market, were also supported by the falling dollar, helping to maintain a fairly steady return.
In February livers saw a fall in price, but the March report shows that they have returned going up by 14¢/kg on February, to trade back at A$1.21/kg, which is 47¢/kg up year-on-year.
Export volume into Egypt increased again in March, predominantly made up of liver shipments.
The price of tongues reached a high in March, up A$1.55/kg compared to February, which is only 11¢/kg down on last year, but MLA said that again the falling dollar had a big effect on that result.
Prices of heavy weight range rumen pillars stabilised and traded at A$11.16/kg which is 37¢/kg up on last year. Demand in South Korea for rumen pillars remains steady.
Thick skirt traded $1.25/kg up on last year, at A$6.07/kg, and thin skirt prices were A$1.29/kg higher for the same period, averaging A$6.07/kg also. Weasand was not reported this month.
Overall demand for frozen offal into Japan was poor, despite a falling dollar, while South Korean demand remains steady.
Tail prices fell sharply in March, but were still A$1.46/kg above last year, averaging A$7.81/kg, down by A$1.32 on last February. Tendons were also down A$1.60/kg month-on-month, to average A$5.00, which is on parity with the price a year ago.
Sheep offals continued to trade steady across the board. Tongues were down, at an average of A$3.45/kg, while kidneys rallied significantly to A$3.70/kg.
Sheep tripe prices improved by 20¢/kg across the year, to trade at A$4.00/kg, 25¢/kg down on February.
Sheep hearts have been steady all year, still hovering around A$1.50/kg, and averaged A$1.50/kg in March.
The average price of lamb and sheep runners was steady, trading at A$6.30/piece for lamb and $4.80/piece for sheep, however all sheep offals were lightly reported.
In the pharmaceutical field, the average price for foetal calf blood is now around where the real market is, as long term contracts dry up, according to MLA.
Concentrated gall remains fairly steady however it was also lightly reported. The average price is down 17¢/ kg on last month however this was up 50¢/kg on last year’s price.
The MLA report says that overall, the market is somewhat subdued because of market closures and will depend upon what develops over the next few months.
Meat and bone meal (MBM) prices have continued to decline throughout the month, with soybean meal production remaining strong and keeping prices down to clear large stocks.
Accordingly reduced use of MBM in feed rations has meant local sales are at significant discount to export prices.
Blood meal prices continued the slide that started last month with aquaculture demand still very low and sellers having to find alternative feed sources, such as poultry rations, which are at a discount to aqua feed.
The average prices now being quoted are around A$1068/tonne ex-works, a further A$120/tonne down on last month.
Tallow remains soft on the back of continuing low palm stearin prices and large supply volumes of palm stearin in the market. Limited interest from Singapore has not helped improve prices for tallow either.
The price of 1%FFA tallow averaged A$670/mt, to rise A$20/mt on last month, while 2%FFA product realised A$642/mt, up A$7/mt on last month.
Hide markets remain challenging at the moment, despite local prices improving across all classes due to the softer Australian dollar.
With the softening of the Euro, supplies from Europe at lower prices are putting pressure on Australian and US hides sellers to reduce prices to compete.
The only positive in the leather trade is automotive and upholstery tanners have orders.
Nevertheless, these tanners are aware of the abundance of material, due to the soft shoe, handbag and garment market, and they are able to take a hard line on prices. It will be interesting to see what happens following the annual Asia Pacific Leather Fair in Hong Kong which was held at the end of March.
You can view the full report by clicking here.