It is no secret that cattle prices are high but local saleyards are forecasting that the best might be yet to come, despite national forecasts predicting a downturn.
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“Cattle prices are the best they have ever been,” Bowe and Lidbury’s Michael Easey said.
“Every week something new is breaking last week’s market record... I think it will remain static for a while, but with a few fluctuations here and there.”
James Gooch agrees.
“I can’t see the market slipping. These prices are going to be around for awhile,” he said.
Wingham Beef Exports’ Chris Black said the abattoir had also been experiencing record prices, but they were not surprised.
“Other abattoirs have been over killing over the past two years due to the extensive dry periods experienced and farmers needing to offload their cattle,” he said, adding that this has led to a shortage of cattle which has helped drive up prices.
“We knew this day would come, it just took longer than we thought it would.”
Indeed, the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) latest Agricultural Commodities report attributes a forecast 8 per cent rise in national farm production values (to $57.1 billion) over 2015/16 largely to increases in livestock values and strong crop production.
“The value of livestock production is forecast to increase by around 11 per cent in 2015–16 to $29.1 billion, on the back of an expected increase in farm gate prices for beef cattle, lamb, sheep and wool,” ABARES executive director Karen Schneider, said.
Responding to dry seasonal conditions and higher cattle prices, a depreciation of the Australian dollar, and strong export demand for Australian beef and live cattle, September’s national report shows the Australian weighted average saleyard price of beef cattle is forecast to increase by 37 per cent in 2015–16 to average 500 cents a kilogram (carcass weight), the highest in real terms since the early 1980s.
But Wingham Beef Exports is already averaging over 500 cents a kilogram (carcass weight) for producers.
“The demand for red meat worldwide is very strong at the moment, especially now that the China market has opened up,” Mr Black said.
Alongside grass-fed cattle from across NSW, the abattoir kills a lot of grain fed cattle sourced predominantly from its ‘sister’ company in Texas, on the NSW Queensland border. It then sends its meat all over the world.
“Our cows and bullocks make good grinding meat,” Mr Easey said, referring to America’s penchant to hamburgers and the fact that Australian grass-fed beef is leaner than grain-fed American beef, so the two types tend to get mixed in together.
ABARES confirms that international demand for Australian beef and live cattle has remained strong, increasing cattle prices significantly over the past few months. But it says demand is expected to decline by mid 2015/16 when America’s own beef production increases [after a lengthy dry].
“This is expected to put some downward pressure on prices, particularly for older cattle,” the report states.
At the same time, assuming improved seasonal conditions, farmers in Australia will also be looking to restock their herds.
A spokesperson for ABARES stressed that its forecasts were national, based on a range of factors and averages which would not apply to every region.
“What’s happening nationally might be quite different for Gloucester,” he said.
Certainly, according to the local livestock agents, April’s rain has put the region in a great position, with plenty of feed around. Gooch’s store sales have been averaging 600 to 800 cattle a fortnight for the past 12 months.
According to Mr Easey, restocking at higher prices should not be a deterrent for farmers.
“The bottom line figure is better than it was 12 months ago,” Mr Easey said, quoting figures for feeder steers selling for $900 this time last year now selling for more than $1400, and bullocks which were $1400 now selling at $2300.
Neither Mr Easey nor Mr Gooch can see the market slipping for the region, with both predicting them to stay high for some time.
“Of course, the weather will still be a factor... but I don’t think we’ve seen the best of it [the prices] yet,” Mr Gooch said.