The Australian beef industry will more than likely continue the first half of 2017 in much the same fashion as last year – tight supplies, robust restocker demand and the subsequent likelihood of a strong young cattle market. As the year progresses though, beef production is expected to slowly start increasing again and, as this eventuates, some downward pressure is likely to be placed on the market.
Expectations are for a further 3% decline in Australian cattle slaughter in 2017, to 7.1 million head. Despite forecasts for slightly heavier cattle, Australian beef production is forecast to follow suit and decrease 3%, to 2.1 million tonnes cwt. Australian beef and veal exports are likely to correlate with the lower beef production and are estimated to decline a further 5% in 2017. While this is expected to be the third consecutive fall, it will still be the fifth highest export volume on record.
The number of cattle on feed is forecast to remain constrained by the still very high feeder cattle prices, which closed 2016 up 80% from the pre-surge average levels. Live exports will also continue to be challenged by the smaller pool of cattle (especially in the north), resistance from some markets at current price levels and continued uncertainty around import policies.
The domestic market is showing some stronger signs and per capita beef consumption in Australia is forecast to rise slightly in 2017, edging close to 26kg per person.
Moving onto prices, the Australian market is following a similar pattern to what occurred in America, although just 1-2 years behind. Once the US market broke through its long-term average trading range, it took just over two years to hit a high, before taking 15 months to lose much of the gains. Encouragingly though, the US has stabilised 38% above the previous level, which potentially indicates a new floor.
From <MLA>