OVERSEAS demand for lower-value red meat products as the pandemic continues to cut into household incomes has served the Australian offal market well, with prices across the board either firming or stable.
Meat & Livestock Australia's latest co-product market reports shows halal kidneys recording the strongest growth, up 93 per cent year-on-year, while lungs and hearts lifted 45 and 28pc, respectively. Halal hearts averaged a solid $3.15 a kilogram, up 70c from December.
Liver prices averaged $1.28 a kilogram, 19c up month-on-month.
On the other hand, premium products such as tongue, thickskirt and rumen pillars eased somewhat.
Market consultant Dennis King said lower-value products were performing strongly on the back of coronavirus demand in key markets for Australia, particularly in South East Asia.
"Indonesia has been severely challenged with the virus, given its dense and relatively- poor population and they have been a big market for lungs, livers and tails," he said.
"Every hotel in Jakarta has oxtail soup on the menu."
The smaller pool of cattle available for slaughter in Australia was putting heavy upward pressure on all red meat products, including offal, he said.
That may result in more competition in some key offal markets as customers look for cheaper suppliers, and there was indeed some rationing of Australian product happening, Mr King reported.
"But the hope is we'll be able to keep all our offal markets operational through this period of low supply," he said.
The drying up of supply would likely have a fairly significant effect on prices in the hides space - in a good way, Mr King felt.
After falling to less than a dollar a piece last year courtesy of excess inventory and tannery closures, hides have done quite a u-turn in January.
Victorian hide prices have surged 133pc. Heavy Victorian hides are now commanding $26 a piece.
NSW saw the largest year-on-year growth, at 325pc, with heavy hides trading at $18.50. Queensland prices lifted 71pc on year-ago levels.
Mr King said Chinese demand had played a significant role, with the big customer leading the global economic recovery.
There would, however, be a limit to how much the hide market recovers with the trend towards synthetics still strong.
"Hides are certainly in a far better position than they were a few months ago and I think there is probably still some upward movement to come," Mr King said.
"The cancellation of global leather fairs again this year is a concern as they are a big part of keeping the industry vibrant.
"The biggest threat is ongoing coronavirus issues in Europe, as the likes of Italy and European Union countries represent a large proportion of our sales."
MLA analysts reported most sheep offal prices remained steady on last month but are elevated on year-ago levels.
Sheep runners saw the largest movement, tracking up 104pc on the same month last year.
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