Insights June 2021
Insights June 2021
- Australian cattle prices remained relatively steady in May but could rise in coming months due to ongoing tight supply and stronger export demand.
- The strength of export and restocker demand will be the key factors that determine cattle price during winter.
Australian cattle prices remained steady near record highs in May. Tight supply and firm demand continued to support the market. The Eastern Young Cattle Indicator (EYCI) rose by one per cent from the start of the month with a peak at 903c/kg in mid-May. A drier month in eastern Australia likely held back further price growth by weakening restocker demand. Heavy steers also trended higher and returned to record high territory above 700c/kg. A wetter month for Western Australia helped push the Western Young Cattle Indicator (WYCI) to a new high. This indicator reached 1,025c/kg before settling at 1,018c/kg by the end of May.
Prices are expected to remain supported by below average supply over the coming months. A good feed base in most cattle regions should continue to allow producers to keep stock. Cattle supply improved in May with average weekly slaughter 15 per cent higher than April. Slaughter was 20 per cent lower than May 2020 as producers continue to keep stock and rebuild herds.
Beef export volumes increased in May, up by 5.5 per cent from April. There was increased export demand from China and Japan where export volumes increased by 27.5 per cent and 18.3 per cent. Tight supply kept Australian beef exports 22.4 per cent lower compared to the previous year. Global beef prices could receive a temporary boost due to Argentina deciding to ban beef exports for 30 days. This ban will particularly impact China who lose a key supplier of beef which accounted for 23 per cent of imports in 2020. The impact of reduced global supply led to a 10.2 per cent increase in the US lean beef import price. Export demand for Australian beef is likely to strengthen if the Argentinean ban extends for longer than a month. A longer ban would challenge global supply.
Support for higher prices in the coming months is expected to come from continued strength in export and restocker demand. A favourable rainfall outlook in major cattle regions should provide further confidence for producers to continue restock.
Source: Meat & Livestock Australia