Insights September 2021
Insights September 2021
- Australian cattle prices increased during August as tight supply and firm demand continued to place upward pressure on prices.
- Chinese imports have taken another hit with suspended Brazilian exports adding to restricted Argentinean exports.
Australian cattle prices continued to increase during August. Tighter supply and firmer demand were still providing support to the market. The Eastern Young Cattle Indicator (EYCI) rose by 2.1 per cent from the start of the month to a peak at 1,032c/kg in mid-August. Heavy steers also increased in value during August by 4.4 per cent to reach 783c/kg by the end of the month. Despite a drier month in Western Australia, the Western Young Cattle Indicator (WYCI) rose to 1,001c/kg in August. The WYCI experienced a 2.6 per cent increase when compared to the previous month.
Prices are expected to remain supported by below average supply in the coming months. Cattle supply improved in August as weekly slaughter increased 6.2 per cent during the month in eastern states. Supply only increased marginally in Western Australia. Slaughter in the first week of September was 23.5 per cent below the five-year average. Producers continuing to retain stock and rebuild herds is keeping supply tight.
Beef export volumes decreased in August 2021, dropping by five per cent from July. There was decreased export demand from Japan and the US. This resulted in declines in export volume of 15.4 per cent and eight per cent, respectively. Continued tight supply has kept Australian beef exports for the year-to-date 19.4 per cent lower compared to 2020.
Chinese beef imports are being challenged by reduced supply from Brazil and Argentina. Argentina is restricting export volumes to 50 per cent of 2020 levels until at least the end of October. Meanwhile, Brazil temporarily suspended exports in early September. This was a control measure after two cases of Bovine Spongy Encephalopathy (BSE) were detected. Brazil and Argentina have been the largest suppliers of beef to China, accounting for 38 per cent and 22 per cent of imports respectively. Brazil’s suspension is expected to be short-lived but could prompt an improvement in Chinese demand for Australian beef. An improvement would be welcomed as Chinese demand for has been relatively weak in 2021.
High cattle prices are still expected in the coming month. A favourable rainfall outlook for spring should continue to fuel strong restocker demand. Good pasture availability will likely see producers retain stock to heavier weights. An anticipated increase in supply towards the end of the year will likely prompt a steady easing of prices.
Source: Meat & Livestock Australia