AFTER experiencing unprecedented turn-off (slaughter and live exports) in 2014, the Australian cattle industry is likely to see significant adjustments over the coming years, says Meat and Livestock Australia (MLA).
Nanjing Night Net

The high turn-off has had a dramatic impact on the national herd, estimated to have declined from a 35 year high, to a two decade low, in the space of just 24 months.

The flow-on effects from this are likely to last for the duration of the projection period (2020), impacting available supplies, while at the same time, testing market willingness to compete for limited product.

While the decline in 2015 is dramatic, putting the volumes into context, production levels are anticipated to be in line with the 10 year average. Regardless, having come from such supply highs, an adjustment across the supply chain is inevitable, having a range of consequences, including how cattle and boxed beef will be balanced between new and existing customers. This will be the case again in 2016 when further supply shortages are expected.

Indicative beef export prices during 2014 were at record highs, and are forecast to remain strong over the coming 12 months – given current low US beef production and strong global demand assisted by a devaluing $A.

This suggests that while Australian supplies are likely to decline over the coming 24 months, there will be potential for farm gate prices to lift. This has been exemplified by the recent sudden jump in prices, following widespread rainfall over the Christmas period.

Given the strength of the US market in particular, and under the assumption of tighter Australian beef production, an export market realignment is anticipated, with a greater proportion of exports trending back toward the larger, traditional markets of the US, Japan and Korea. The domestic market looks to remain under pressure.

On the live export front, demand is likely to remain robust, with the live trade continuing to contribute an important portion of turn-off. With fewer cattle available, and assuming uninterrupted market access, the South East Asian markets, in particular Indonesia, Vietnam and Malaysia, should continue dominating the trade for both feeder and slaughter cattle.

One of the key assumptions forming the basis of the 2015 cattle industry projections is that Australia will phase out of drought over the coming 12 months, with a greater proportion of production and exports to occur in the first half of the year, before easing in the final quarters.

With this as a key assumption, and given not only the seasonal variability, but the heavy influence seasonal conditions play on the Australian beef supply situation, the MLA Cattle Industry Projections will be updated on a quarterly basis.

This story Administrator ready to work first appeared on Nanjing Night Net.