Cattle regions hang on latest rain forecast

Cattle regions hang on latest rain forecast


Beef
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ABARES forecasts 435c/kg average for this financial year.

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THE cattle market looks like heading into Christmas in an upbeat manner with weather models projecting useful rainfall in eastern growing areas and a declining Australian dollar giving beef exports a leg up.

On the other side of the festive break, the story is also looking cheerier with the chief commodity forecaster scaling back its tip for the drop in prices overall for this financial year.

Senior government economists now expect the weighted average saleyard price for cattle to finish at 435 cents per kilogram, just 4 per cent down on the previous financial year.

In it’s December quarter forecasts, the Australian Bureau of Agriculture, Resource Economics and Rural Sciences said falling export prices for beef and higher cattle turn-off was still providing the underlying dynamics for a lower overall average.

However, the new forecast is a boost on the 8pc fall, or 420c/kg mark, that ABARES put forward in June.

Market analysts say this means the spike in prices due to come with widespread rain is now expected to be far more substantial.

The question is whether this week’s rain forecast, which beef producers say is the most significant for Queensland cattle regions since last summer, will be enough to spark the beginning of that shift.

Emerald livestock agent Terry Ray said good forecasts in the past month had proven disappointing.

“In terms of area covered and quantity forecast, this one is very big with the entire coast of Queensland and several hundred kilometres inland forecast to get rain,” he said.

“If half of Queensland does gets from 20 to 70mm, it will turn things around quickly.

“Categories selling well in the last month have been feedlot entry weight and slaughter weight cattle. Those struggling have been the lighter cattle.

“Rain will put cattle going into the paddock in demand again and make a huge difference.”

ABARES believes the overall financial year drop will largely be the result of competition from the United States in export markets more than offsetting increasing demand for beef in China.

US beef production is forecast to rise this financial year following four years of national herd expansion, according to ABARES’ Tim Witnall.

Higher production will both decrease US demand for imported manufacturing beef from Australia and increase US exportable supplies.

US exports of beef in the calendar year to August 2018 were 15pc higher year-on-year, ABARES reported.

Most of this increase went to Australia's major Asian export markets - Japan and the Republic of Korea.

The other side of the equation, ABARES noted, was rising Chinese demand for beef in the wake of increasing household incomes and urbanisation.

The outbreak of African swine fever in China, the world’s largest producer and consumer of pig meat, is also likely to flow through to increased global demand for beef, ABARES said.

Contributing to downward pressure on the cattle market is the continuing run of above-average slaughter volumes.

ABARES noted cattle slaughter in the eastern states over August and September was at similar levels to those experienced during the 2013 to 2015 Queensland drought.

The higher female slaughter rates of 2018 will likely flow through to a contraction in the Australian national herd for 2018/19.

Even when conditions improve and the herd enters a rebuilding phase, the smaller breeding cow inventory will limit the number of births, Mr Witnall pointed out.

“This will slow herd rebuilding efforts and restrict the rate at which beef production can grow in coming years,” he said.

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The story Cattle regions hang on latest rain forecast first appeared on Farm Online.

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