Beef Price on the Raili Charts
Despite nationwide lockdowns and a slide into recession, Australia's east coast cattle market has been surging throughout this year.
Key points:
- Australian cattle prices have been surging throughout 2020
- Analysts say prices will start to dip once beef producers stop restocking
- The gloomy economic forecast suggests overseas consumers will favour cheaper types of meat
Beef producers have been clamouring to restock their previously drought-parched properties after solid rainfall, driving saleyard prices to record highs.
And, after an epic sell down of Australia's cattle herd during the drought, farmers, feedlots and abattoirs are all competing for the smallest cattle herd in 30 years.
Australia is now home to some of the world's most expensive cattle.
Pregnant cows, worth $1,200 a head in northern New South Wales three years ago now have a $2,000 price tag, while heifers have gone from $350 a head to $800 in three years.
This has all occurred as the global economy slides into a pandemic-induced recession, and analysts are predicting the booming cattle market won't be able to stay detached from the global downturn for long.
Prices on the main industry indicator, Eastern Young Cattle Indicator (ECYI) the will start heading down in either October or November, according to independent livestock analyst Simon Quilty.
"I see we're getting to around about 850-860 cents on the ECYI.
"By late June it was at 774 cents, so I think we're in for an interesting time, there's going to be a lot of factors going in our favour getting into the 850-860 level, but we've got some headwind without doubts."
The headwinds
Around 70 per cent of Australia's beef is exported, and half of that goes into the food service industry.
Rising unemployment in Australia's key overseas beef markets, South Korea, Japan, China and the US are a concerning sign for the premium beef Australia sells.
"The question is what happens when the stimulus packages run out and what will that do to consumer demand," Mr Quilty said.
"We're already seeing in parts of North America consumers starting to switch across to cheaper meats, in alternative to the more expensive meats like beef."
China slapped an export ban on four Australian meat processors in May, but by April exports to China were down by 21 per cent compared to 2019.
Later, the JBS Dinmore facility — Australia's largest — was closed for a week, with the owners citing a shortage of slaughter cattle, high saleyard prices and volatility in international markets as the reason.
NAB agribusiness economist Phin Ziebell said Australian cattle prices, and those of our key competitors could not continue travelling in opposite directions.
"Prices will fall when restocked interest recedes," he said.
'Green's good'
This year's rainfall, and the forecast of more to come, has seen optimism surge into nearly all corners of the cattle market.
Beef producer Maria Jackson sold all but 30 of her cattle during the drought, and her husband has worked interstate for six months to help pay the bills.
With green pastures across her property, near Tamworth NSW, she is actively restocking.
In two year's time, Ms Jackson hopes to have calves hitting the ground, and plans to purchase an additional bull to help get the job done.
Demand for bulls is also surging, 1,300 kilometres to the south, in Victoria's Gippsland, Angus stud breeder Anne Marie Barrow has already sold out.
COVID-19 restrictions meant they had to move their on-property sale online, but that did not temper demand.
"We could actually sell double the amount of bulls we had offered", Ms Barrow said.
"We're very busy fielding enquiries, not just from existing clients, but from people who've found us on the web, or word of mouth or a neighbour has one of our bulls.
"So they're in the market looking, but we just don't have the product to offer them."
Additional reporting from Amelia Bernasconi and Jennifer Ingall.
Source: https://www.abc.net.au/news/rural/2020-07-02/analysts-call-time-on-cattle-markets-bull-run/12408226
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