Beef steady as lamb recovers: ANZ

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ANZ predicts Australian cattle prices will stay high for some time as the sheep industry works its way through a series of pandemic disruptions

Beef steady as lamb recovers: ANZ
Cattle prices are likely to stay steady for the next two years, ANZ predicts

 

Cattle prices in Australia are tipped to stay around current record levels for at least the next two years, according to ANZ’s latest agricultural commodity report

Prices saw a period of completely unprecedented growth from the start of 2020 until early 2022, as the arrival of the drought-breaking rain across much of Australia encouraged growers to enter a period of sustained restocking activity.

Michael Whitehead, ANZ’s Executive Director of Agribusiness Research says it looks like cattle prices will now be entering a relatively flat period.

"Over the course of this year, prices have stayed in a roughly narrow band, mostly within 1100 – 1150 c/kg," he says.

"In dollar terms, the relative stability of cattle prices of the current period has not been seen since 2006."

Using a new modelling method that considers variables including herd growth rates, female slaughter levels and exchange rates, it’s likely this strength will continue, Whitehead says.

"Under the model – and noting that it has been quite accurate historically – Australian cattle prices are forecast to stay high for the next two to three years, potentially hovering around the 1,000 c/kg level," he says.

"Arguably, in the absence of a black swan event such as a drought, there would appear no major reason why cattle prices should fall markedly for at least the next year or two."

That said, Whitehead added that labour shortages at abattoirs could slow cattle sales to both processors and feedlots.

A lack of available labour and lockdowns are also having an impact on the Australian sheep industry despite a solid first half for 2020, ANZ head of Agribusiness Mark Bennett says.

"While the sheep sector has been less impacted by the restocking zeal which has pushed cattle prices into the stratosphere, it has also felt a greater impact from some of the side effects of COVID-19 and associated lockdowns," he says.

Saleyard restocker lamb prices have trended downward for much of the year, driven by low numbers in the yards due to seasonal factors – including wet weather and producers holding stock back in the hope of a price rise, ANZ says.

"While there are several issues overhanging from the pandemic still impacting saleyard prices and supply, the coming winter months should help regain a demand/supply balance.

"After that, all signs point towards a spring kick in the market with some in the industry even going so far as to speculate that the National Trade Lamb Indicator may breach the magic 1,000c mark," Bennett says.

"For wool growers, the outlook is somewhat buoyed by the view that Australian wool remains somewhat under-priced given the lack of global supply of fine wool following the concerns over Foot and Mouth Disease in South Africa limiting their supply." 

"However as wool production picks up as a result of flock rebuilding and strong season, the strong domestic supply may keep some slight downward pressure on prices," he adds.

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