Prices to trend lower

Australia’s cattle market has been rejuvenated by recent rainfall across many parts of Australia, ensuring cattle prices will remain higher year-on-year for the first six months of 2017.

However, heading toward 2018, a slowly growing herd will likely result in prices trending lower.

According to Meat & Livestock Australia’s (MLA) quarterly update of its 2017 Australian Cattle Industry Projections, the 2017 outlook for cattle slaughter in Australia remains at 7.1 million head, down 200,000, or three per cent year-on-year, however, much heavier carcases will assist in alleviating the pressure from constrained supply and result in only a one per cent year-on-year decline in beef and veal production.

MLA’s Manager of Market Information Services, Ben Thomas, said female cattle slaughter over the November 2016 to January 2017 period was the lowest proportion of the adult cattle kill ever, at 42 per cent, highlighting strong producer intentions to retain females and replenish herds.

“Given the low female slaughter figures, it confirms that the wheels are in motion for the national herd rebuild, with many producers likely to take advantage of the current low fodder and grain prices to carry stock through,” Mr Thomas said.

“The average carcase weight for Australian cattle was the highest ever during the summer months – the result of a higher proportion of cattle on feed for longer, heavier grassfed cattle coming through the system, as well as the significant drop in female slaughter.

“Female cattle slaughter is expected to remain relatively low for the duration of this year, with the average adult carcase weight now revised one per cent higher, to 291kg for 2017.

“The short-term impact is beef and veal production is now estimated to be 2.1 million tonnes carcase weight (cwt) for 2017, down just one per cent year-on-year, rather than being down three per cent as originally forecast in January.”

Mr Thomas said after trending downwards from November 2016 to early March 2017, cattle prices received an injection of life from the widespread March rainfall, causing a significant rise across all categories.

“The start to the year has set up positive expectations for the remainder of 2017, especially given the prices recorded in early 2016 were the highest for that period, and have now been exceeded,” Mr Thomas said.

“However, while the market outlook for the next six months remains positive for producers with cattle to sell, largely underpinned by the ongoing very tight cattle supply situation, it’s a scenario that cannot last.

“Once the increased numbers of the herd recovery start flowing through the system later this year, it is highly likely that Australian cattle prices – from heavy steers through to young cattle – will feel the weight of the additional supplies and softer global markets.

“Nevertheless, 2017 cattle prices will probably end up averaging very similar levels to the record levels of 2016, before trending downwards in 2018 and 2019.”

MLA provides a range of market information services including daily red meat market news updates, detailed market analysis, regional saleyard reports, live export information and price indicators.

To read more or to subscribe to regular information, visit the prices and markets on the MLA’s website.

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