This is the year global beef prices will stabilise, according to Meat and Livestock Australia, upon the release of its 2017 market projections for the Australian industry.
The good news is the Australian cattle herd is expected to increase, for the first time in three years, to 26.9 million head.
However, the first half of the year will continue to be a struggle with tight supplies and strong re-stocker demand.
Meat and Livestock Australia’s Ben Thomas said the cattle market would feel the impacts of the increase later in the year.
“Once beef production slowly starts increasing again, there will be some downward pressure on prices in the Australian cattle market,” Mr Thomas said.
The projections suggest exports would continue to be challenged by the current, smaller cattle herd.
Australian beef exports are forecast to decline for the third consecutive year, although 2017 could be the fifth largest export year for the nation.
Overall, expectations are for beef and veal exports to ease a further five per cent this year to 970,000 tonnes, seeing 69 per cent of Australian production destined for international markets.
Global meat prices to stabilise
No doubt meat processors would want to see higher global beef prices to help stem the decline, and also to help recover from a tough year in 2016 plus the challenging one ahead.
During 2016, there was a general decline in global prices around the world which did not help processors who had already lost money and yield.
The manufacturing beef indicator softened 11 per cent, down from record highs of 640 cents in 2015.
MLA’s Mr Thomas said 2017 was shaping up to be a slightly better market place for meatworks, but there was still a long road ahead.
“Where the indicator is right now is still lower than those record highs were, but when we have a bit of a look at a longer term series the indicator is actually 15 per cent above the long term average,” he said.
“One of the leading global forecasters, Steiner Consulting Group, is actually forecasting for the global market to at least stabilise this year.
“So 2015 was the record year, 2016 was the correction, and off their forecast 2017 is going to be the stabilisation.”
However, a further three per cent decline in Australian cattle slaughter is expected, dropping back to 7.1 million head.
Growing global competition
There will still be plenty of competition in the export market from other countries like Brazil, America and India.
China in particular has one of the world’s largest cattle herds, and its domestic beef production is expected to see continued growth in the coming years.
Other meats like buffalo, pork and chicken will also continue to increase in volume.
“There is always that constant pressure from the growing global production of poultry and pork meat as well, so not only beef, but the other proteins,” Mr Thomas said.
“Every year for the past 30 years has been a record poultry production year [and] only four out of the last 30 have not been record pig production years.
“Where Australia has a unique point of difference is our clean, green image … there are not too many other countries around the world — especially for beef — that can boast that image.”