Published April 28 2021
A convergence of factors in the beef industry is driving confidence ahead of the Beef Australia Expo in Rockhampton in May.
It’s been a big year in the cattle industry, as everybody on the supply chain knows. The drought has broken in many parts of Australia and the season is looking terrific for so many producers. Conditions have been largely stable for months.
This is of course great news for those on the sell side, although it makes it interesting for processors, feed-lotters and those in other parts of the sector.
One factor that could also have an impact on the economics of the players in the middle of the supply chain – particularly feed-lotters, is rising grain prices, although grain supplies themselves remain strong.
While the current market situation will be being seen by different stakeholders from different perspectives, those who have been in the industry a long time have seen this all before. They know they’re in a cycle and that circumstances will change again.
Cattle prices continue to hover around the record levels they have reached in 2021. Recent speculation prices may start to fall as producer took advantage of good selling opportunities were dashed by rain, which has led to ongoing restocking as producers make the most of fresh feed.
Restocking continues and there’s every likelihood it could continue for months to come. Indeed, the appearance of spring calves at the market may be the next opportunity to see any downward pressure on prices.
Interestingly, the recent prices out of saleyards show latest restocking push was probably most intense in Queensland. Further south, the growth in prices has moderated.
The export market has been softening considerably to the US and to a lesser extent, China and Japan, but the outlook for a number of markets is promising. The sector needs to be diligent. Supply will come back and if prices soften, this could lift export activity even faster.
As an industry and as exporters, it is important to keep those trading relationships strong so Australia’s share of the market, particularly in the US and China, is one that can be clawed back when we return to a position of supply.
There's a lot going on and a lot going to happen in the future. Ultimately, the Australian cattle industry has all the fundamentals behind it to rebuild export volumes and values – it could just take some time.
At ANZ, we would love to chat with you and hear your thoughts about the many factors impacting the cattle sector at Beef Week in Rockhampton in May, where the bank is also sponsoring Australia’s largest carcase competition. See you there.
Michael Whitehead is Head of Agribusiness Insights at ANZ
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