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A ‘healthy’ sheep and beef sector to remain in 2015

June 2, 2015
The Australian red meat sector prospects are set to stay positive for 2015, with strong cattle and sheep prices to remain ‘healthy’.

That’s the message from Rabobank senior animal proteins analyst Angus Gidley-Baird who will tour Victoria and southern New South Wales next week, presenting to local producers on the trends and developments on the horizon for the Australian red meat sector.

Mr Gidley-Baird, who is based in Sydney, says there is no reason why the record-strong prices will drop in the near future.

“Prices for beef and sheep have been very strong, supported by continued strength in our export markets and a degree of optimism in the local market that graziers are likely to realise some of the high prices we have seen in places like the US in recent times,” he said.

“Looking ahead, one of two things is likely to happen – either it will rain and restockers will compete for limited cattle supplies, or supply will tighten up because there just can’t be that many cattle left to sell. Either way this will push prices higher, so we can’t see any major reasons for downside, particularly from a beef point of view.”

Presenting at Rabobank client functions in Werrimull, Balranald, Bendigo, Melbourne and Rokewood next week, Mr Gidley-Baird will discuss Australia’s key export markets – live and boxed – highlighting where the value might be for Australian beef and sheepmeat producers.

The Eastern Young Cattle Indicator (EYCI) continues to set records, despite high slaughter numbers continuing. Saleyard prices across all categories have also continued to rise, with trade, Jap Ox and feeder steers all increasing (between 11 and 23 per cent) since the beginning of April.

“Notably, in April we saw the EYCI defy the ‘normal’ declining trend through April, instead it continued to rise, breaking all records to sit at 487c/kg cwt on 19 May, which is about 150 cents higher than the same time last year,” Mr Gidley-Baird said.

“Cattle slaughter numbers continue to rise year-on-year and last month we saw exports remain strong, with firm growth in the US market continuing.”

Many positive developments are taking place across key export markets for Australian beef and sheepmeat, however Mr Gidley-Baird said the recent news that Brazil has regained access to China appears to be official and will be “one to watch”, although at this point, it is not expected to have a major impact on Australian exports to China.

“Another one to watch are the developments between the US, Canada and Mexican trade following the US losing its the final appeal against the World Trade Organisation ruling on country of origin labelling.

Looking at sheepmeat, while there has been a bit of a slowdown from China (a key export destination for Australian lamb and mutton exports), Mr Gidley-Baird said the market remained firmly in positive territory.

“While China has been a bit softer, the US and Middle East are both taking huge volumes of Australian sheepmeat, particularly lamb,” he said.

“Locally, we’ve all seen the news in the sheep industry here about some processors cutting back shifts, but that is reflective of the seasonal pattern when at this time of year, supply drops off, so it’s natural for processors to manage their facilities accordingly.”

Overall, he said the Australian red meat sector is looking pretty “solid”.

“It’s good that producers are receiving these favourable prices, which more closely reflect the value of their product,” Mr Gidley-Baird said.

“While it sounds cliché, it really is the perfect storm for the Australian red meat sector –

we’ve see strong gains in new and existing export markets, global prices have picked up as well, and a welcome depreciation of the Aussie dollar has really worked in our favour. We just need a good season to ‘really make the hay’ and see these market fundamentals remain as buoyant as they are at present.”

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.

Media contacts:
Denise Shaw
Media Relations
Rabobank Australia & New Zealand 
Phone: 02 8115 2744 or 0439 603 525 

Jess Webb
Media Relations
Rabobank Australia & New Zealand 
Phone: 07 3115 1832 or 0418 216 103