July 11, 2013

Australia's cattle prices increase slightly in June

After hitting a four-year low in May, the same month a record beef export figure was recorded, cattle prices in Australia have staged a slight recovery over the past month.

The index that tracks the eastern states markets, the Eastern Young Cattle Indicator, bottomed out in mid-May at AUD2.79 (US$2.60) a kilogramme. It's climbed since then to be around the AUD3.30 (US$3.06) mark, but it's still about AUD0.50 (US$0.46) below what it was at this time last year.

Matt Costello, from rural financier Rabobank, says a glut of cattle from regions in drought have now been slaughtered, helping Australia hit a record 100,000 tonnes of beef exports in May.

"For the January to May period, we've processed around an extra additional 390,000 head of cattle, and you look at where prices ended up falling through May, there's no real surprise given how much additional product we did see come onto the market. I certainly think we will see a tightening of supply through these winter months."

The National Livestock Reporting Service says the AUD0.52 (US$0.48) rise in the EYCI since mid-May is due to a resurgence of re-stocker activity in areas where there's been some rain and therefore unseasonal pasture growth. Feeder buyers have also been more active replacing stock used to fill that big export month.

World-wide prices have also been down this year, with Rabobank's Global Cattle Price Index falling 6% in May. Costello says that was because of high slaughter rates due to dry conditions in New Zealand, Brazil and the US. He believes Australia did well to offload record amounts of beef in a tight market and hopes the interest of newer markets can be sustained.

He said that the story has been their emerging markets, particularly China. From January to May they have sent about 63,000 tonnes and when compare to the same time last year, they were just over 3,000 tonnes. He also added that record volumes were also sent to the Middle East.