What's your poison?
It isn't just in dairy that fat has come back into vogue, but
in meat too – even as consumers in the West, at least, are losing their sweeth
As Abares, the official Australian commodities bureau, said
earlier this week, sugar use "declines are expected in the European Union and
the US, where consumers are switching to alternatives such as high-intensity
By contrast, in the US meat sector, fat is back in,
according to Steiner Consulting, after "decades of squeezing out flavour and
joy from food.
"Whether it is highly marbled choice ribeyes, succulent
flavoured chicken wings, or full fat milkshakes, consumers are voting with
their dollars for more flavour," the US-based analysis group said.
The case is based on the buoyant pricing of fattier cuts,
such as boneless ribeye steaks, which "in the last two weeks has shot up above
$10 a hundredweight, an all-time record level", Steiner Consulting said.
The ratio of boneless ribeye steak prices to values of fed
steers, at about 8 times, "is dramatically higher than the sub 5x multiple we saw in 2013 and 2014".
The price ratio for lean beef items, by contrast, has been "steady
Appetite for bacon
And the trend is reflected in the pork complex too, where values
of pork bellies, the source of streaky bacon, and pork trimmings had seen a "dramatic
shift" relative to the price of hogs.
"Foodservice operators have become consistent large users of
bellies, with bacon a preferred flavour enhancer on burgers, sandwiches and
And when retailers "decide they want to jump on the bandwagon
and run $3.99 or $4.99-a-pound specials, the quantity demanded becomes explosive".
"Consumers are telling us that they demand flavour," Steiner
"Gone are the days when a consumer would accept a flavourless
slice of 'protein' simply because it promised to be 'good for you'."
Dairy fats in demand
The comments came as results from Tuesday's GlobalDairyTrade
auction underlined the demand for fat in the dairy market too, with anhydrous
milk fat values gaining 4.4% to $6,885 a tonne, a record at the auction, and taking
gains over the past year to 90%.
Butter prices rose by 2.9% to $5,768 a tonne, also a GlobalDairyTrade
record, and taking gains over the past year to 98%.
By contrast, the overall GlobalDairyTrade index, which is
weighted towards milk powder, fell by 0.8% on Tuesday, and is up by 56% year on
End of the rally?
The rise in butter prices has been reflected on futures markets
too, with European butter futures for July on the German-based EEX exchange hitting
E6,000 a tonne on Tuesday.
In Chicago, butter futures for July last week hit 272.50
cents per pound, the highest for a nearest-but-one contract since September
2014, although the lot has eased since to 263.725 cents per pound.
In fact, "it is easy to draw comparisons to the heady days
of late 2015, when the butter market logged a meteoric rise and a spectacular
crash," said the US-based Milk Producers Council.
"But this time is different," in part because the northern
hemisphere "spring flush" production peak is now passed, while "the holiday
demand season lies ahead".
"The US market is chasing European prices higher, with
Oceania on its heels," the council said.
"If Europe's butter market can keep rising, ours likely can
And there is cause for price support, given that "Europe
came into the year with butter inventories at a five-year low, and the bloc
continues to report lower year-over-year production and robust demand".