May 23, 2023
Australia sees 20% drop in cattle prices
Australia's cattle prices have dropped 20% this year from herd restocking, but analysts are still bullish on the outlook and predict a return of more stable market conditions that will benefit exports.
The industry benchmark, the eastern young cattle indicator (EYCI), has skidded to $6.1 per kilogramme. That has almost halved from the peak in 2022 when supply could not keep up with global demand and made Australia's cattle prices among the world's most expensive.
Since then, Australia has rebuilt its cattle herd thanks to heavy rainfalls from weather phenomenon La Niña which helped replenish grass and grain.
Australia's national cattle is expected to reach 29 million, the largest herd since the late 1970s.
Industry trade body Meat & Livestock Australia estimated the national cattle to expand to around 29 million this year, the largest herd since the late 1970s, reflecting the most intense rebuilding period in nearly 50 years.
Rabobank senior animal protein analyst Angus Gidley-Baird projected prices to be more normal in 2023 after dramatic fluctuations over the past three years as Australia recovered from one of the worst draughts in its history.
"Cattle prices have returned to more average levels, making Australian beef competitive again and creating a more sustainable market for everyone in the supply chain," Gidley-Baird said.
Earlier this month, high prices for Australian cattle prompted major trading partner Indonesia to look for alternative supplies and Brazil, the largest exporter of beef worldwide, promised to supply cattle for less.
Rabobank predicted the EYCI to stabilise between $7 and $8 per kilogramme in 2023.
"If this range is maintained, the average EYCI for 2023 will be 30% below the 2022 average," Gidley-Baird added, noting that prices would still be historically elevated.
Rabobank is bullish on the outlook, predicting beef producer margins to stay strong in 2023 and 2024. It also expects to see a 10% rise in Australian beef exports.
- Financial Review