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Insights October 2021

11 October 2021 |Cattle
Cattle image

Insights October 2021

11 October 2021 |Cattle
The October update provides an analysis of production and pricing trends for Australian cattle producers. It provides producers with a timely overview of current trends and an outlook for the coming months.

Commodity Overview

  • Australian cattle prices once again experienced an increase during September for the EYCI, whilst the WYCI decreased.
  • Beef exports increased during September with South Korea and the US experiencing the highest growth.
  • High cattle prices are expected to persist in October due to favourable seasonal conditions and strong restocker demand.

Australian cattle prices continued to increase during September. Firm demand and tighter supply provided support to the market. The Eastern Young Cattle Indicator (EYCI) rose by 5.7 per cent from the start of the month to a peak at 1,055c/kg in early October. Heavy steers also increased in September, up by 12 per cent to reach 861c/kg in early October. With a drier month across most of Western Australia, the Western Young Cattle Indicator (WYCI) fell to 966c/kg in September. The WYCI experienced a 3.5 per cent decrease when compared to a month earlier.

Prices are expected to remain well above average in the coming months on the back of below average supply in the market. Slaughter in the first week of October was four per cent lower than a month earlier and six per cent lower year-on-year. This has resulted in a decrease of available beef to be exported and applied upwards pressure on prices.

Beef export volumes increased in September 2021, up by 3.5 per cent from August. China experienced the largest change in beef imports from Australia, with an over 12 per cent increase in September, however, they are still 4 per cent lower year on year.  The US was the second largest importer of Australian beef, increasing 5.8 per cent month-on-month and 28 per cent higher year-on-year. Tighter supply has kept Australian beef exports for the year-to-date 16.7 per cent lower compared to 2020.

Chinese beef imports remain challenged by reduced supply from Brazil and Argentina. Argentina is set to ease restrictions on Chinese beef exports in early October. Meanwhile, Brazil’s temporary suspension on exports from early September is still in effect. Australia has seen little benefit from reduced South American supplies to China and has encountered growing competition from the US. US beef exports to China in September were up 16 per cent from August and 460 per cent higher year-on-year. Australian producers continue to face competition from the US as China, Hong Kong and Mexico all significant increased their beef imports from the US.

High cattle prices are expected throughout the coming month. A continued favourable rainfall outlook for spring and early summer should continue to fuel strong restocker demand. An anticipated increase in supply near the conclusion of the year is likely to prompt a gradual reduction of prices.

  A graph showing the eastern states weekly cattle slaughter rates from January 2018 through to October 2021. 	Slaughter in the first week of October was four per cent lower than a month earlier and six per cent lower year-on-year. This has resulted in a decrease of available beef to be exported and applied upwards pressure on prices.

Source: Meat & Livestock Australia

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