The hard and fast jump in young cattle prices that has come on the back of January rain is likely a good indicator of the volatility producers can expect from the market this year, according to agribusiness specialist Rabobank.
The bank’s beef experts expect all cattle classes to trade in a higher price bracket this year and say it will be rain events that trigger the sharp spikes.
Volatility is typical of a recovery phase from drought and to some extent unavoidable, head of food and agribusiness research Tim Hunt said.
With continuing widespread rains, cattle prices – in particular young and female stock – could jump by as much as 50 per cent, Rabobank’s just-released Agribusiness Outlook 2020 says.
Cattle slaughter is forecast to drop 18 per cent in 2020 to an estimated 6.9m head, which is a large decrease and close to that experienced in 2016 when there was a widespread improvement in seasonal conditions.
Limited cattle supplies, after continued liquidation, are the main factor for reduced slaughter.
Australia’s beef exports would continue the shift towards China, Outlook 2020 says.
While production remained weak, the consolation was the extension of high global beef prices.
The animal protein sector in particular would experience ongoing red hot Chinese demand in the wake of African Swine Fever losses, Mr Hunt said.
“Beef is extremely well placed to benefit,” he said.
“To some extent, Chinese consumers are looking to alternative sources at the moment, given the price of pork has increased so much.
“The differential with beef has narrowed and beef is becoming more widely available.
“The underlying rise in incomes in China means more people can afford beef also and while there will be flow back to pork, it will be a multi-year recovery phase for the Chinese pork industry from which Australia can benefit.”
Article credit – www.farmonline.com.au