Long term confidence in Aussie cattle

Long term confidence in Aussie cattle

Australian producers with cattle to sell should have confidence in the market over the long term, according to Meat & Livestock Australia’s cattle industry projections update.

MLA Manager of Market Information Ben Thomas said the annual cattle slaughter was estimated to reach another unprecedented high.

“This will be the third consecutive year of cattle slaughter exceeding eight million head, something that’s never been seen before. As a result, beef production is estimated to reach 2.46 million tonnes cwt – which will be the second highest volume ever,” Mr Thomas said.

“The female slaughter rate so far in 2016 is 28 per cent above the five year average, which will ultimately lead to fewer calves and lower beef production. Yet over the next five years Australia will still continue to produce more than two million tonnes of beef and veal annually.”

Mr Thomas said another important factor for the industry was the expectation of a continuing weaker A$, bolstering the demand for Australian beef.

“Cattle prices are expected to remain buoyant over the longer term, even with the usual seasonal decline expected in the final months of 2015.

“Australian beef and veal exports after the first nine months of 2015 are four per cent ahead of the same time last year (which turned out to be a record), but in the fourth quarter we will see a continuous slowdown in monthly export volumes.

“The value of the dollar against the US currency will help maintain the value of exports for exporters and our competitive position globally.

Mr Thomas said this would be particularly important for exports with most of Australia’s major competitors expecting higher production, including Brazil and India, although the US is expected to dip between now and 2017.

“This will continue to pressure our market share in regions where there is common access, yet Australian beef’s high food safety profile will support its ongoing position in the market.

“The total turn-off rate illustrates how extraordinary the past couple of years have been,” Mr Thomas said.

With processors and feedlots the main buyers during the third quarter, Mr Thomas said this trend would continue until pasture and water conditions improved giving re-stockers confidence in the market.

“Australian producers with cattle to sell should have confidence in longer term prices, given the value of our shrinking pool of cattle and ongoing high demand for our high quality product both here and overseas.”

This story was first published in Leading Agriculture magazine.