Coronavirus crisis: Cattle market optimism high despite COVID-19 impact

Australia’s cattle market will defy the constricting global economy and enjoy a positive year of high prices alongside strong demand, according to a new Rabobank report. The multinational banking company has cited this year’s heavy rain across the Eastern States as fuelling farmers’ re-stocking motivation, reducing cattle sales and increasing competition for dwindling cattle numbers. Rabobank’s Battle of the Bulls versus Bears document, released on Monday, forecast Australian cattle slaughter to slide 14 per cent this year to 7.29 million head. A further decrease of 2 per cent has been flagged in 2021. It comes as Meat and Livestock Australian this month flagged a possible national herd rebuild was imminent. MLA senior market analyst Adam Cheetham said there was “a renewed sense of optimism in the cattle market” and an expected falling slaughter rate created “the prospect of the national herd entering an expansion phase”. Despite the positive outlook, Rabobank senior animal proteins analyst Angus Gidley-Baird conceded the coronavirus crisis would hit the cattle sector. However, he said favourable domestic factors, such as China’s rising demand for Australian beef as African swine fever decimates the Asian pork inventory, would outweigh the negative international influences. “A weaker Australian dollar against the US dollar will help offset higher domestic cattle prices,” Mr Gidley-Baird said. “African swine fever continues to reduce pork availability in China. “Chinese pork production is expected to fall a further 15 per cent to 20 per cent in 2020, approximately 8 million tonnes, as a result of the reduced pig herd. “China will need to import more protein, including beef, to make up for this shortfall.” MLA has suspended its Eastern Young Cattle Indicator prices amid the COVID-19 pandemic, while its market officers set to be absent from weekly saleyard auctions. The EYCI was trading at 741¢/kg carcase weight when it was last recorded on March 19. Mr Gidley-Baird said he expected the domestic cattle price to stay robust once the EYCI emerged from its suspension. “The report forecasts the average annual Eastern Young Cattle Indicator to increase by 30 per cent in 2020 to equal the annual average record set in 2016 at 632¢/kg cwt,” he said. “Based on the last reported EYCI price of 741¢/kg cwt on March 19, this would mean prices were expected to ease but still remain strong over the remainder of the year.”