The Stock Report Slowing supply to boost prices
STRONG prices for Australian sheep and beef producers look set to continue next year.
Rabobank’s latest Global Animal Protein Outlook report says that despite trade tension and high feed prices, limited supplies and strong demand will keep prices firm.
However, the production capacity of Australia’s beef herd and sheep flock will be limited by heavy culling of female cattle and sheep in 2018.
Any upside will depend on improved seasonal conditions in the year ahead.
The report forecasts a slowing in the pace of growth for meat production in most regions throughout the world next year.
Global animal protein production of beef, pork and poultry is expected to expand by just over one million tonnes in 2019, well below the five-year average growth rate, to 500 million tonnes.
Production growth will slow across nearly all key regions, with China predicted to see a substantial production decline, driven by the impacts of African swine fever on its pork sector.
Brazil’s livestock production, however, is forecast to continue its strong growth trajectory while the production outlook for North America is also relatively strong,
In Australia sheepmeat and beef production will decline and the same applies to New Zealand.
The overall restrained global roduction outlook will provide some upside on price.
Rabobank senior animal proteins analyst Angus GidleyBaird said strong global demand for sheepmeat and limited supply would support strong prices through 2019.
New Zealand, the world’s other major supplier of sheepmeat, is set to have its lowest lamb kill on record next year.
“While further upside beyond record 2018 sheepmeat prices will be limited, prices will remain firm, given strong demand in key global markets such as the Middle East, China and the US,” he said.
Lamb production in Australia will remain restricted in 2019, impacted by higher sheep sales in this year due to dry weather conditions.
The report says Australia’s beef-cattle numbers will remain very low following heavy destocking between 2013 and 2016 and then again in 2018.
Mr Gidley-Baird said cattle numbers would remain steady at the current low until conditions improve.
“While limited supplies support cattle prices for producers, supply-chain efficiencies will be tested, with lower volumes available for feedlots and processing,” he said. “And without substantial rain, 2019 will test many producers, given already-limited and expensive fodder supplies.”
Rabobank expects Australian beef production volumes to fall with lower slaughter numbers and export volumes will also drop slightly in 2019.
On the positive side, Mr Gidley-Baird said a number of countries, including Australia, were expected to benefit from weaker currencies.