Experts tip easing in Aussie cattle price

Soaring Australian cattle prices will begin to ease but remain high this year as demand falls and supply increases domestically. That’s according to six of Australia’s top industry analysts, whose predictions were included in Meat and Livestock Australia’s February Australian Cattle Industry Projections. After surging past 1000¢/kg for the first time ever and repeatedly breaking its own record last year, the Eastern Young Cattle Indicator — Australia’s price benchmark — rocketed to an all-time high of 1191¢ in its third week of trading for 2022. But the panel of analysts — from Rabobank, Thomas Elder Markets, Mecardo, NAB, Auctions Plus and ABARES — has forecast the EYCI will fall to 998¢ by mid-2022. While that might seem a big drop, MLA market information manager Steven Bignell said it was important to put it in context. “The 10 year average of the EYCI is 547¢, so at 998¢, that is still 82 per cent higher than the 10-year average,” he explained. “These are still record prices in a historical context, so it’s still a really positive sentiment for producers. “The reason for any dips would be that as the herd rebuild matures, there will be a greater supply of animals and there might be a little less restocking demand.” Mr Bignell said a significant increase in supply was expected in the second half of 2022 as young cattle reached processing weights, putting downward pressure on the market. The average annual price for the EYCI in 2021 was 961¢, while modelling by Thomas Elder Markets has predicted an average price for 2022 of 828¢. The EYCI’s western counterpart, the WYCI, peaked at a record 1187¢ in October before closing 2021 at 1099¢. It opened the New Year 40¢ higher and has since fluctuated considerably. While restockers are currently buying the majority of cattle in the east, feeder buyers are purchasing the bulk of WA’s young cattle. “With increased supply in WA’s WYCI, the strength of the lot-fed market demonstrates the demand for feeder cattle in the State,” MLA’s report said. While cattle yardings were softer in all other States last year, WA’s yarding volumes were stronger by 5pc or 29,000 head, demonstrating WA producers’ desire to capitalise on an improving market after strong autumn and winter rainfall. As abattoirs have their margins increasingly squeezed, soaring cattle prices have had comparatively less impact on the supermarket shelf. But with the retail price of beef rising 11 per cent in the third quarter of 2021 — more than any other meat protein — domestic consumption fell by the same amount. “We have seen a slight dip in (retail) beef sales volumes because of price, but encouragingly, because we have had that price growth, and because people do see beef as a premium product, the total value of sales actually hasn’t shrunk,” Mr Bignell said. Meanwhile, international demand for Aussie beef is expected to grow from the second half of 2022 as economies recover from COVID-19 and the world reopens.