AUSTRALIAN beef prices have enjoyed a spectacular, but much needed, rise in the past 18 months.
The Eastern Young Cattle Indicator first broke the 600 cents a kilogram carcaseweight mark in January and, on short winter supply, has surged to 660c/kg.
Many agents expect prices to continue trading at these levels for the remainder of 2016.
Landmark Harcourts Strathalbyn livestock manager Richard Snoswell says with the Australian cattle herd at 26 million – a 20-year low – it will take at least a few years to grow back to the long-term average of 28-29m head.
“It has become a numbers game or lack of numbers game,” he said.
Mr Snoswell said better prices were long overdue, with cattle producers requiring about $1000/hd for weaners to remain financially viable.
Despite the large outlay for restockers, he says those buying and selling in the same market “can’t go too far wrong”.
“At Mount Compass last week, it didn’t matter if it was a 200kg Angus steer or a 500kg Angus steer, everything was $3.60-$3.70/kg liveweight,” he said.
“If you are selling bullocks for a couple of thousand dollars, if you can replace two for one on what you have sold, c/kg is almost irrelevant.”
Mr Snoswell says the benchmark for the past 18 months has been at least $3/kglwt, which he predicts will continue.
“We are not going to see $3.50-$3.70/kglwt for forever and a day,” he said.
“But hopefully we are not going back to the $2-$2.20/kg of a few years ago.”
Elders Naracoorte branch manager Tom Dennis also sees no reason why the heat will come out of the market, with such tight supply.
At last week’s prime cattle sale, grain-finished steers made up to an incredible $3.96/kglwt, even with Teys Australia’s Naracoorte abattoir closed for maintenance.
Mr Dennis acknowledged winter was always a period of low supply, prompting price spikes, but these “extreme prices” were a great sign for the months to come.
“This could be the new normal, barring some unforeseen disease outbreak or adverse international conditions,” he said.
“If we can get even an average season, we will see extremely strong rates all the way through, especially with the way things are tracking in NSW and Qld.
“Traditionally we see bottlenecks when they (people) hold their stock trying to hit the high prices. But with the way supply is so low, I just can’t see that happening this time.”
