Australian retail beef prices continued to climb in the June quarter, but the rate of increase has slowed markedly.
It was interesting to see an increase in retail beef, despite cattle prices having only risen marginally, and still being well behind historical highs.
The rise in retail beef was slight, with an 8 cent, or 0.04 per cent rise in the June quarter, to the new record of 2033c/kg (Figure 3).
This quarterly rise was minor compared to the 115c, or 6pc rise seen in the year to June.
Beef remains at a premium to lamb at the retail level, with the spread remaining at the relatively narrow 14.5pc in the June quarter.
With record saleyard lamb prices in June and July, we can expect retail prices to further close the gap on beef, and offer solid support.
When we compare retail beef prices to saleyard cattle values, the retail markup actually closed-in in the June quarter.
The National Trade Steer rallied 30c, or 5.6pc on the previous quarter.
This was a strong rally and would suggest there should be a rise in retail values.
However, the National Trade Steer was basically steady on June 2018.
The retail premium to the National Trade Steer fell from 302pc back to 282pc, but retailers are still doing better than any time since March 2015.
What does it mean?
The good news for cattle producers is that consumers seem to be becoming comfortable with the new higher retail levels.
If retailers can move beef at higher prices, it means they can pay more for cattle, although the real test for processors and retailers will come when the drought breaks.