BEEF producers can be “cautiously optimistic” about prices with the smallest herd in 20 years and a continuing decline in export tariffs.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
But Meat & Livestock Australia market information service manager Ben Thomas sees a few “storm clouds on the horizon”, including a significant lift in United States beef production and Brazil’s growing global footprint.
Australian beef prices had already softened in early 2016 due to larger US numbers.
Mr Thomas told producers at last week’s Future of Eating Quality Forum at Hahndorf that 2015 was an “astonishing year”, with record prices defying another massive sell off – 10.5 million head – due to the widespread dry.
In the first quarter of 2015, eastern states slaughter was tracking at 180,000 cattle a week compared to normal levels of about 140,000, and while this came back later in the year it was still well above the average. SA contributed to this jump with 470,000 slaughtered last year, compared to its long-term average of 380,000.
MLA is forecasting a 17 per cent year-on-year drop in slaughter in 2016, back in-line with the 10-year average. In 2017 the herd could hit 25.7 million – the lowest levels since 1994. Despite this fall, production may only drop 10pc with heavier carcaseweights.
“Whether you are a restocker, lot feeder, processor or live exporter there is a lot less cattle in the country than a few years ago to compete for, going a long way to supporting prices,” he said.
Free trade agreements signed with three of Australia’s four largest markets – Japan, Korea and China – in the past two years would add to the competitiveness of Australian beef. “In the next 15 years that is going, in theory, to add another $20b of value to the Australian beef industry by not having tariffs on our product.”
The Australian dollar had gone against exporters in the past two months, but Mr Thomas said most banks were forecasting this to stabilise at about US74c – well below the past few years.
On the flip side, Brazil was regaining access to many of the markets it was banned from after an atypical case of Foot and Mouth Disease in 2012 and was working hard on their integrity systems. Its production is expected to grow 3-4pc, with exports to lift 11pc year-on-year.
“Australia really needs to keep its point of difference and aim for the quality end of the market and foster the integrity systems we have in place – the areas we can beat Brazil and those lower cost competitors,” he said.
“But we need to be mindful they are hot on our heels, improving that image, sitting on the global round table for sustainable beef and doing a lot of research on reducing beef emissions.”
