LIVESTOCK prices across the board continue to travel into record territory, fueling record income expectations for beef producers until next year.
This spills over to other sectors of the economy in a way that can only cement the intrinsic value of the beef industry to Australia.
Meat & Livestock Australia market analysts say the domestic livestock market is now as strong as it has ever been, with prices throughout the supply chain rising last week and multiple sales indicators hitting new records.
The national steer indicator last week hit a new high of 534 cents per kilogram liveweight, the heavy steer indicator this month set a new high of 458c and is on the rise again, currently sitting at 450c. The average cow indicator reached 352c.
The Eastern Young Cattle indicator stands at 1029.50 c / kg carcass weight, just a few cents off the all-time record set at the end of August.
Outrageous prices also reached new levels last week, underscoring the ability of processors to pay more given global dynamics.
Analysts and agents highlight phenomenal confidence in the market thanks to excellent seasonal conditions, a weak global beef supply facing growing demand in Australia’s major export markets and a widespread shortage of livestock as the herd is rebuilding itself.
Victorian agent Simon Henderson, Phelen & Henderson & Co in South Gippsland, described the situation this way: these prices look cheap then. “
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Government economists now forecast that average sales prices in 2021/22 will increase by 12% to reach 702c / kg bodyweight.
The Australian Bureau of Agriculture Resource Economics’ September quarter forecast would be driven by favorable weather conditions for herd rebuilding and an increase in the value of Australian beef exports by 3% to nearly $ 10.1 billion .
ABARE’s Jonathan Wong said price momentum through August will likely keep the market strong for the rest of the year, but it was unlikely that strength at that level could be sustained for the rest of the year. exercise.
“The reconstruction means that more livestock will likely be available in the markets in 2022, which will ease supply pressure on prices,” Wong said.
“Demand in major export markets is expected to remain strong and tight supply will keep export prices slightly higher.
“Beef export prices are expected to increase slightly, but less than selling prices. “
Replenishments go light
Analysts and MLA agents said in an effort to sidestep the high prices, producers were chasing lighter cattle in order to capitalize on the feed in front of them and earn a margin by reducing upfront expenses.
The steadily rising trend in the market has proven to be beneficial for producers keen to trade, MLA reported.
A report by Matt Dalgleish of Thomas Elders Markets said that while feedlot buyers currently dominate EYCI sales volumes, replenishments are paying the big premiums.
The average price of EYCI livestock purchases by restockers was close to 1090c / kg last week, compared to 1007c for feedlots and 903c for processors.
“In addition to local factors, the export price of 90CL (chemical lean) beef imported to the United States has increased in recent weeks as concerns about the global beef supply fueled somewhat by a disruption in the cow Brazilian madness and the persistent shipping constraints of the supply chain, had export buyers scrambling for limited stocks, ”Mr. Dalgleish wrote.
Rabobank says it is the demand for replenishment in addition to the continued global demand for protein that is repeatedly pushing the prices of livestock products to new highs and sustaining strong confidence in the industry.
Its latest Rural Confidence Survey found that more than half of the country’s beef producers expect the current excellent conditions to continue over the next 12 months, while 34% expect the current excellent conditions to continue over the next 12 months. that they improve even more.
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