Market Morsel: Poor start
There are a handful of model inputs for January 2022 yet to come in, so the EP3 theoretical beef processor margin model opening gambit for the 2022 may still be revised in future updates*. Nevertheless, the January average margin for the start of this season came in at a loss per head of $371.
There was a slight increase in margin loss for the December 2021 figure too revised up from $357 to $366 per head of cattle processed. The January 2022 opening figure more beef processor margins came in 8% worse than what was seen for January 2021. However, there is a chance for some relief once we get past February as cattle input costs have eased in recent weeks while key beef export values have firmed.
As we pointed out in our previous update on processor margins, it is still going to be tough year for Aussie beef processors. Meat and Livestock Australia have lifted their slaughter forecast from 6.65 to 6.7 million head and the continuation of this tight supply scenario is likely to keep pressure on processing margins during 2022. But there is some hope on the horizon that margins will begin to normalise as we head into 2023/24.