Prices of domestic cattle set to ease
A combination of increased cattle supply, reduced producer demand and weaker global prices will see domestic cattle prices ease back from the highs reached in 2017 to stabilise at just above five-year averages, according to agribusiness banking specialist Rabobank.
In its just-released Australian 2018 Beef Cattle Seasonal Outlook, Rabobank said cattle slaughter numbers were expected to rise marginally and overall Australian beef production to increase by 3 per cent for the year.
Rabobank senior animal proteins analyst Angus Gidley-Baird said while the cattle price declines would more than offset the small rise in production, impacting on producer incomes during 2018, the outlook was still for an overall profitable 2018 for Australia’s beef producers.
Mr Gidley-Baird said Australian beef production was forecast to rise slightly as the herd rebuild continued.
“After falling by 1.7 per cent to 7.16 million head in 2017, we expect cattle slaughter to rise slightly in 2018, with herd rebuilding over the previous two years in southern states now expected to start generating increased turn off,” he said.
Australia’s key beef export markets are expected to remain strong but an increase in competition would “limit price upsides”.
“Japan, the US, South Korea and China will remain key markets. However, we will see increased competition from other exporting nations in all these markets,” Mr Gidley-Baird said.
The Rabobank report forecasts 2018 domestic cattle prices to come in at 15 per cent below prior-year levels. The Eastern Young Cattle Indicator is expected to average AUc 513/ kg cwt for the year — just above the five-year average.