Cattle outlook: Banks divided on beef

JAMIE-LEE OLDFIELD, The Weekly Times November 28, 2017

YOUR outlook on cattle ­prices in the coming months could depend on your bank.

Three big banks released beef cattle market reports last week, with a sharp difference in price predictions.

The Eastern Young Cattle Indicator has stabilised at ­between 570-580c/kg for ­November, finishing Monday on 577.50c/kg.

ANZ’s beef commodity ­report last week said competition from key importers meant current EYCI levels were the “new normal”, while NAB predicts it’s on its way down to below 500c/kg.

ANZ agribusiness insights chief Michael Whitehead highlighted that 2015-16 cattle prices averaged 64 per cent more than 2010-14, and said the supply chain should ­“consider the higher average prices in future planning”.

“The lack of rain in the northern region meant producers had to start destocking and, as a result, we saw prices slide, although not dramatically.

“Now, as the rains arrive, more producers are holding stock back and the prices are returning to mid-June levels,” Mr Whitehead said.

US re-entry into Australian markets, including China, will likely restrict the growth in beef exports to just 1 per cent in 2017-18, according to ANZ.

“That said, doubts remain over the capacity of the US to supply the required volumes of HGP-free beef, as required by China,” the report said.

However, NAB agribusiness economist Phin Ziebell predicts the EYCI could fall below 500c/kg if key cattle areas miss out on summer rain.

“The bureau’s latest outlook for a drier than average summer in Queensland, the Northern Territory and ­northern NSW is likely to ­reflect negatively on cattle markets,” he said.

Mr Ziebell also sees global trends having a negative impact on Australian prices with US prices lower due to cheap feed grain.

“Our view is that Australian prices cannot remain detached from global fundamentals ­forever.”

Rural Bank’s Australian Cattle Annual Review points to domestic and export demand remaining strong, but production is also increasing.

Rural Bank agribusiness general manager Andrew Smith said October rain was likely to provide some support to prices for the remainder of the calendar year, and should ensure they settle about 30 per cent higher than the five-year average (468c/kg).