News - Beef Articles

Australian cattle markets have experienced a recent decline in prices due to an abundance of young cattle supply and challenging conditions in the US market. Although prices have reversed in the past week, there are potential risks for further volatility in 2023. Despite this, overall beef prices remain above pre-2020 levels, indicating a profitable period for many producers. Global dairy trade auctions have shown a downward trend, posing challenges for Australian processors who are dealing with falling milkflow and high farmgate prices. While farmgate prices currently remain high, there are emerging downside risks for the 2023-24 season. However, it should be noted that the current disconnect between falling global prices and high farmgate prices is not expected to continue indefinitely. Australian wheat prices have significantly declined since mid-November, primarily due to easing concerns about Black Sea supply, a stronger Australian dollar, and a large domestic harvest. However, volatility is expected to persist due to tight global stocks and geopolitical concerns. Despite this, Australian domestic feedgrain prices remain higher than the previous year, and there is an ample supply of feed-grade grain in the Australian market for 2023. ABARES forecasts record-breaking wheat production, surpassing last year's record, along with substantial production numbers for barley and canola.

Weekly kill: 2022 shaping to be lowest slaughter year since 1985, and possibly 1984

November beef exports lower, as market challenges return

Strong performance seen in Aussie F1 feeders in Japan, but price is a growing issue

US cattle cycle to impact Australia’s beef fortunes next year, seminar told

The Australian agricultural commodity prices have shown a slight increase in the past two months, driven by higher wheat and cattle prices. Despite the weaker global economic outlook, agriculture continues to experience elevated prices as buyers consider seasonal and geopolitical uncertainties. Seasonal conditions have been generally supportive, with a promising winter crop expected. However, recent floods have damaged crops in parts of eastern Australia, posing risks to crop quality. While prices and yields remain strong, input costs and market volatility remain challenging factors. Global monetary policy normalization is progressing rapidly, with the US Federal Reserve and the Reserve Bank of Australia (RBA) raising interest rates. This weakens the global economic outlook for 2023, with the expectation of further rate hikes. The Australian dollar (AUD) has fluctuated amid global economic uncertainty. Wheat prices have rallied due to global supply uncertainty and the breakdown of the Russia-Ukraine wheat deal, suggesting high prices may persist. Cattle prices have rebounded, but restocker demand and feed grain costs pose uncertainties. Global dairy trade auctions have shown lower results recently, and while farmgate prices remain high, downside price risks are emerging. Cotton prices have retreated from previous highs, but with favourable growing conditions, growers remain optimistic. Persistent global inflation pressures raise the likelihood of further rate increases, leading to a projected significant global economic slowdown in 2023. While the Australian economy has remained resilient, early signs of slowing are evident, particularly in labour demand indicators and consumption measures. The central banks are expected to continue raising rates in response to high inflation. The AUD/USD exchange rate has fluctuated, with forecasts of the AUD ending the year at around 65 US cents. Australia has experienced a wet year, particularly in south-eastern regions, which has generally supported crop production. The La Nina weather pattern is expected to continue for the next few months, bringing above-average rainfall to the eastern states. However, Western Australia is forecasted to have drier conditions than usual. Farm input prices have been increasing since 2020 due to various factors, and while there are signs of stabilization, they remain elevated. Oil prices have been volatile, impacted by global events, but forecasts suggest slightly lower prices in 2023.

The recent La Niña weather pattern combined with above-average rainfall is expected to continue affecting beef production in Australia. The excessive rain has caused flooding in some regions, hindering the ability to easily quantify damage to cattle and pastures. Despite favourable seasonal conditions supporting producer demand, cattle prices have remained steady, and slaughter numbers have been low due to good pasture availability and low margins. Export volumes have also been affected, with a decrease in September after an unusual lift in August. Additionally, the Australian government's commitment to reducing livestock emissions without introducing taxes or levies may have implications for the beef industry. The dairy industry in Australia has been impacted by the La Niña weather pattern and excess rainfall. Floods and wet conditions have led to feed losses and reduced milk production in various regions, particularly in northern Victoria. Milk production has trailed behind the previous year, and consumer demand for dairy products has weakened. Cheese production has expanded, but skim milk powder production has decreased. Dairy commodity markets have experienced price declines, influenced by sluggish imports from Chinese buyers and weakening consumer confidence in China's food market. The Australian grain market is facing volatility drivers from both domestic and international factors. Unseasonal rain and flooding caused by La Niña have negatively affected crop quality and reduced tonnage. The Ukrainian grain corridor deal with Russia has been disrupted, potentially impacting global grain prices. Wheat prices reached a four-month high before retracting due to uncertainties surrounding the deal's renewal. The future of grain prices depends on how much wheat is downgraded into feed and whether the Ukrainian grain deal is permanently eliminated. Additionally, the recent flooding and weather events in agricultural regions have led to higher food price inflation, affecting the overall food supply volumes in Australia.

The heavy rains in October 2022 had a significant impact on the Australian grain industry. Prior to the rain, the grain and oilseed crop were expected to reach near record levels for the third consecutive year. However, the rains caused uncertainty about the volumes and quality of grains and oilseeds in affected regions. The impact of the rains will be felt not only in the coming harvest but also potentially in the national crop for the next few years. The late harvest, potential bottlenecks at grain ports, and downgraded grain quality could lead to logistical challenges and affect grain prices. In contrast to the grain sector, the cattle industry was less affected by the heavy rain and flooding. While some cattle were stranded for a period, major stock losses were minimal, and overall yardings remained strong. The wet weather could potentially lead to upward pressure on cattle prices in the future. The rain's impact on crop volumes could result in a larger availability of feed grain, benefiting cattle producers. As a result, some grain producers may choose to reduce plantings and increase livestock numbers, including cattle. The wet paddocks and greener pastures may also lead to higher sale weights and prices for weaners. The Australian beef industry faced challenges in its exports, with overall figures down compared to previous years. Beef exports for October 2022 were the lowest since 2016, partly due to increased competition from larger volumes of US beef. While the decline in exports can be attributed to various factors, including the rebuilding of domestic cattle operations and reduced demand from South Korea, Australian beef exports continue to face strong competition from the US. The forecast for strong US herd slaughter until late 2023 further contributes to the competitive landscape. In the dairy sector, falling milk production in Australia has led processors to review their processing capacity to match lower supply. Global Dairy Trade auction prices have been on a downward trend since early 2022, influenced by weak global consumer sentiment and demand. Despite the challenges, Australian dairy farmers have been supported by good opening prices, favourable weather conditions, and the potential for increased profitability. However, high feed prices, uncertain demand from China, and a downward trend in global prices pose concerns for the industry. Recent announcements of processing capacity review and shutdowns by major processors indicate the challenges faced by the Australian dairy industry.

US drought impact bodes well for Aussie beef, as global supply winds shift

Wagyu big driver in new wave of Australian feedlot expansion