News - Beef Articles

Beef prices in Australia remained strong throughout June, with limited supplies and strong competition among buyers driving up prices. The Eastern Young Cattle Indicator (EYCI) reached a new record of AUc 932/kg cwt, and the average retail beef price was AUD 23.87/kg in Q1, nearing the inflation-adjusted record set in 1979. Despite expectations of increased supplies in the future, it is currently difficult to foresee any factors that would cause prices to drop significantly. However, May beef exports were still down compared to previous years, primarily due to a 25% decrease from the five-year average. The cyber-attack on JBS and subsequent plant shutdowns also affected cattle slaughter numbers, leading to a decline in beef exports. Dairy commodity prices in Australia experienced a slight softening in June but remained elevated compared to the previous year. The weakening Australian dollar provided some support for dairy exporters. Milk production in the United States and New Zealand showed positive growth, while Australian milk production remained stagnant. However, the forecast for the new season suggests a wetter spring ahead, which could potentially support milk production growth. The record milk pricing in the market for 2021/22, driven by favourable minimum milk price offers and step-ups, is expected to result in a profitable season for the Australian dairy farm sector. The upcoming spring flush in New Zealand is also anticipated to contribute to market dynamics. Grain markets experienced price increases in June, with global fertiliser prices rising by 5-20% and urea prices increasing across Australia. Sustained increases in global prices, tight shipping availability, and strong rainfall and soil moisture levels supported the demand for grains. However, local importers faced challenges due to the weak currency, which affected their purchasing power. The uncertainty caused by the changing expectations for the USD led to relative weakness in commodity currencies, including the AUD. Despite these challenges, the strong economic data in Australia and expectations of a recovery in the AUD suggest that grain prices may remain high in the near term, with further upside possible if local supply tightens.

The Commodity Index rose 0.8% in May, driven by gains in the price of grains and oilseeds. The index remained strong due to low global stocks and dryness in the Northern Hemisphere. Local wheat prices struggled to follow global markets, but winter crop planting in Australia is expected to grow 2% this year, with canola hectares seeing the biggest increase. Overall, Australia is on track for another above-average production year in beef, dairy, and grains. In the dairy sector, global spot markets remained stagnant in May, with Oceania origin commodity prices mostly flat. However, a price correction is expected in the later stages of 2021 due to an anticipated softening of Chinese import demand. Supply growth across major export regions has been limited, with positive growth in South America but tempered by rising feed costs and inflation. Australian milk production has expanded slightly, and healthy profit margins are expected for dairy farmers in the upcoming season. Cattle prices continued to trade strongly in April, supported by limited numbers of finished cattle and strong restocker demand. Slaughter numbers and beef exports were down compared to the previous year, with the exception of increased volumes to South Korea and the Middle East. Argentina's temporary suspension of beef exports may cause some disruption but is not expected to have a significant impact on global markets. As for grains, global urea prices are expected to ease in the southern winter, but local prices may be influenced by local demand and supply. Ocean freight prices remain at record highs, impacting product costs at the farmgate. The Australian dollar is projected to trade close to its current level against the USD, supported by a strong economy.