Weather looks set to hit Aussie cattle prices

By Georgi Gyton

- Last updated on GMT

Ongoing strength of prices going forward will be impacted by weather conditions over the next three months
Ongoing strength of prices going forward will be impacted by weather conditions over the next three months

Related tags Livestock Beef

A three-month period of rainfall has the potential to give Australian cattle prices “a strong kick”, according to Meat & Livestock Australia’s (MLA) latest quarterly update.

While prices at the beginning of the year started off positively, the ongoing strength of prices going forward will be impacted by weather conditions over the next three months.

Ben Thomas, manager of market information at the MLA, said: “Australian cattle prices started 2015 on a very positive note, with the Eastern Young Cattle Indicator (EYCI) averaging 437¢/kg cwt over the March quarter – this is the highest quarterly average on record."

However, he said: “A strong kick in the market is almost certain if widespread rainfall is received. As we saw in January, the cattle market had an almost immediate reaction when prices jumped more than 70 cents in a matter of weeks.”

He said the market would depend on “whether or not the positive three-month rainfall outlook comes to fruition”​.

Also revealed in the report, the national adult slaughter statistics have been revised – up 400,000 head to 8.2 million – following higher-than-expected cattle slaughter across the eastern states in Q1 2015.

“The robust global demand for Australian beef will remain in play and act as a support for cattle prices here at home, but a significant contraction in turnoff is needed to sustain support for the market,”​ added Thomas.

Exports are forecast to reach 1.15 million tonnes swt for the year – down 11% on 2014. Demand was strong in the first quarter, with exports up 8% year-on-year, with the lion’s share going to the US (36%), followed by Japan (23%), South Korea (12%) and China (9%).

A market update from commodities analyst Mintec, published yesterday (13 April), said that Australian cattle prices had been rising year-on-year due to sustained drought over the past two years.

However, despite forecast rain over the coming months “the cattle herd is unlikely to recover fully until 2020”​, it predicted, as farmers look to focus on herd rebuilding. “The volatility of the market over the past two years could represent the need for some market intervention in the future,”​ it added.

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