The latest ANZ Agri InFocus commodity report released last week predicts the upward trend of beef prices will continue for the longer term, fuelled by global demand and competition from key importers.
The report examined the Eastern Young Cattle Indicator (EYCI) and broader forces influencing the market, and suggested the current price averages reflect a new normal that demand from international markets, particularly China, is driving.
It also highlighted the stark shift in cattle prices in the second half of this decade, with prices from 2015-17 averaging about 64 per cent higher compared with 2010-14.
‘‘Even with this winter’s poor seasonal conditions in key beef-producing regions, prices have remained relatively robust and the supply chain will need to consider the higher average prices in future planning and strategies,’’ ANZ’s agribusiness insights head Michael Whitehead said.
‘‘The lack of rain in the northern region meant producers had to start destocking and as a result we saw prices slide, although not dramatically.
‘‘Now, as the rains arrive, more producers are holding stock back and the prices are returning to mid-June levels,’’ Mr Whitehead said.
Despite the growth in beef production, the outlook for beef exports is expected to be restricted to about one per cent due to the re-entry of beef from the United States into some of Australia’s key markets, particularly Japan and South Korea.
The increasing US herd size is also applying pressure to Australian beef exports to the US.
For wheat producers, harvest is fast approaching in a season vastly different to last year’s record yield, with ANZ’s report suggesting the national wheat crop will fall about 43 per cent, from 35million tonnes last year to between 20 and 22million tonnes.
‘‘Wheat crops could potentially fall even further than the latest forecasts, depending on the positive impact of late rains in Western Australia and frost damage on the eastern seaboard,’’ ANZ’s agribusiness head Mark Bennett said.
‘‘It’s been a tough year for some wheat producers. For many, the season has worsened as it has progressed and it’s fair to say we can expect to see below-average production results across wheat, barley, oats and canola.’’
Meanwhile, recent movement in the corporate dairy environment in Australia has added a new dimension to the year’s price expectations for farmers, with anticipation of greater competition for supply.
Globally, the increase in butter prices in Europe has lessened recently, and the most recent Global Dairy Trade Auction has seen a decrease in the dairy index of 3.5 per cent and falls in the prices of butter, cheese and whole-milk powder.
However, Australian farmers are likely to be somewhat isolated from the immediate impact of these global price movements due to processors’ product mix.