June 1, 2021
Agribusiness financier Rabobank says there are signals that record cattle prices might be coming off the boil.
While it does not forecast any significant collapse in the market, Rabobank believe “a new baseline” for prices is likely to be established as the situation gradually normalises and producers increase herd numbers.
In its latest quarterly report, Rabobank notes that east coast cattle slaughter for April 2021 was down by 30 per cent on the same period last year and 31 per cent on the five-year average.
Beef exports also remained low.
April 2021 exports – 72,502 tonnes of shipped weight – were down 22 per cent on the previous year and 11 per cent on the five-year average, the report says.
However, the bank’s analysts believe years of drought which saw large numbers of cattle sent to abattoirs is now being followed by beef producers buying and retaining cattle to take advantage of last summer’s promising – though still modest – rainfall.
The report says Australia’s beef cattle herd is now at its lowest in 30 years.
This has created a sellers’ market where competition for cattle is fierce.
This has pushed up Australian young cattle prices by almost 50 per cent since February 2019.
But Rabobank says there are now signals that prices might be coming off the boil.
“We believe that current cattle prices in Australia will ease as cattle numbers increase and producer demand dissipates,” the report says.
“However, as the supply chain overcomes the disruption here and consumers adjust their price expectations, we believe the market will adjust and a new baseline will be established.”
Rabobank’s report also notes that the easing of the pandemic in several countries has seen their economies improve and foodservice businesses reopen, which should support ongoing demand for beef.
Australian beef exports may also get a boost from Argentina’s announcement in mid-May that it will be suspending beef exports for 30 days to alleviate rising domestic beef prices.
Argentina currently supplies 22 per cent of China’s beef imports.
