Insights March 2020
Insights March 2020
- Tightening supply and strengthening restocker demand will be the dominant factors in Australian cattle markets in the short term.
- Australian cattle prices are expected to rise further into record territory as restocker demand strengthens in response to recent rainfall.
- Weaker Chinese demand is expected to remain as long as the Coronavirus outbreak continues, adding downwards pressure on finished cattle prices.
Australian cattle prices are expected to rise into record territory in coming weeks as supply tightens and restocker demand strengthens in response to long awaited rainfall, particularly in Queensland.
The eastern young cattle indicator increased by 50.2 per cent in the first two months of 2020, regaining all of the ground lost since previous record highs were recorded over three years ago. Rainfall in January and February helped
to replenish soil moisture and invigorate pasture growth, fuelling restocker demand and stemming the flow of cattle turned off drought affected properties.
The supply of cattle in saleyards is expected to tighten as conditions allow more producers to retain stock, particularly females, reversing the trend of elevated turnoff of cows and heifers which accounted for a record 56 per cent of Australian cattle slaughter in 2019. Reduced yardings will result in a continued decline of weekly slaughter rates, which declined 15.1 per cent during February.
Demand for young cattle could strengthen further as more producers get a clearer idea of feed availability following rainfall.
Restocker demand will add competition to the already firm demand from feedlots and processors. Tightening supply and strengthening restocker demand will be the dominant factors in Australian cattle markets in the short-term. These factors will more than offset downwards pressure on finished cattle prices resulting from softer international demand for beef. Chinese demand is expected to remain weaker as long as the Coronavirus outbreak continues, resulting in weaker economic sentiment and reduced red meat consumption.
Softer demand from China is expected to be temporary as the shortage in protein supply resulting from African Swine Fever is expected to see China import large volumes of beef throughout 2020.
Source: Meat and livestock Australia