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Goat OTH indicator declines

25 June 2020

Key points:

  • National goat slaughter running 24% below year-ago levels.
  • Goatmeat exports to the US back 38% for the calendar year-to-May.
  • Over-the-hooks indicator reported at the lowest level since April 2019.

In response to the widespread rainfall in March, goat prices followed the same upward trajectory as cattle and sheep prices. However, the peak was short-lived and goat over-the-hooks (OTH) prices have gradually declined, despite goat supplies remaining well below year-ago levels.

Nationally, goat slaughter for the year-to-April is back 24% compared to year-ago levels and 46% lower than the five-year average at 410,000 head. According to the National Livestock Reporting Service (NLRS) eastern states slaughter report, processor throughput remained subdued during May and so far in June. For the week ending 19 June, goat slaughter was reported 59% lower year-on-year at 12,000 head.

Last week, the goat OTH indicator stabilised at 748¢/kg carcase weight (cwt), with no change on the week prior but back 170¢ since March and now reported at the lowest level since April 2019. Prices remain at historically high levels, however, they have been far more exposed to the impact of COVID-19 compared to domestic cattle and sheep prices, especially when taking into consideration the stark improvement in conditions and limited availability across all species.

Australian goatmeat production and exports are typically exposed to the volatile supply of the rangeland goat flock. However, recent price movements come on the back of subdued demand from overseas markets, in particular the US. Demand for live goats has also been curtailed due to COVID-19 restrictions in Malaysia, Australia’s largest live goat export market.

As one of the largest exporters of goatmeat, Australia’s reliance on the strength of overseas markets is critical. The US remains the key market for boxed goatmeat, accounting for 70% of total exports by volume, although trade disruptions and demand from foodservice channels have applied downwards pressure to prices. For the year-to-May, goatmeat exports to the US are back 38%, to 3,400 tonnes shipped weight (swt), compared to all markets which have declined 29% to 5,865 swt.

As the US emerges from the worst of the pandemic, demand should pick up, although the timeline for any recovery is unknown. However, combined with domestic supply constraints following consecutive years of drought-driven destocking in key supply regions, prices should find support at historically high levels.

© Meat & Livestock Australia Limited, 2020