March 31, 2015
The reduction of the cattle herd and possible improved seasons will lead to a contraction in Australia’s beef production in 2015, which is likely to further ‘test’ world prices against a backdrop of existing tight global supplies, according to a new industry report.
In its recently-released Beef Quarterly
report, Rabobank says that given the tightness of the global beef market, it is expected that lower Australian production levels will contribute to a continuation of high international prices and improved domestic prices for Australian producers.
Report co-author Rabobank senior animal proteins analyst Angus Gidley-Baird says it’s time for Australian producers to get a “piece of the action”.
“Looking at the last two drought periods in Australia, prices increased from the bottom of the market to the top by as much as 80 per cent,” Mr Gidley-Baird said.
“In 2015 however we have a stronger case for higher prices with high world beef prices, tight global supply, strong demand from US and China and a depreciating Australian dollar.”
As was the case in New Zealand in recent years – where there was no surplus supply – farmgate prices have been at record levels.
“As far as the Australian market is concerned, a supply contraction will take place against a backdrop of a low Australian dollar, a tight global supply, and some positive market developments including implementation of Japanese and Korean trade agreements,” Mr Gidley-Baird said.
“In essence, Australian beef producers haven’t seen such positive fundamentals in quite some time, all aligning at once.”
The Rabobank report shows Australian slaughter numbers have continued to stay in record territory despite some rainfall through drought-affected areas in late 2014.
The much-needed seasonal break for major cattle-producing areas did not occur in the first quarter of 2015, leading to expectations that there will not be any significant rebuilding of herds through the first half of 2015 and delaying the full realisation of higher prices.
Live exports of Australian cattle remains strong, with increased exports to Indonesia, Vietnam and Malaysia in 2014.
Looking at a key market, Indonesia, Mr Gidley-Baird says that despite a much lower first quarter quota, the second quarter quota announced recently was closer to 2014 levels providing opportunities for exporters to increase numbers.
Rabobank Australia & New Zealand is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 115 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 41 countries, servicing the needs of approximately 10 million clients worldwide through a network of more than 1600 offices and branches. Rabobank Australia & New Zealand is one of Australasia's leading rural lenders and a significant provider of business and corporate banking and financial services to the region's food and agribusiness sector. The bank has 94 branches throughout Australia and New Zealand.
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Rabobank Australia & New Zealand
Phone: 07 3115 1832 or 0418 216 103