THE Eastern Young Cattle Indicator (EYCI) could hit 700 cents a kilogram (carcase weight) by 2017 as a 20-year low in the size of the cow herd places pressure on prices according to a number of industry analyst and stock and station agents.
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But that’s assuming the Australian dollar doesn’t strengthen unexpectantly or the US beef market falls.
Meat and Livestock Australia market information manager Ben Thomas released the 2016 Australian Cattle Industry Projections last week and said overall cattle prices would average higher in 2016 than 2015 due to much tighter supply, restocker demand and the lower Australian dollar.
“However, average cattle category prices for 2016 are unlikely to match the heady records posted in August/September 2015,” Mr Thomas said.
“Furthermore, over the projection period, it is likely that prices will peak in 2016 and 2017, before the eventual increase in beef production in Australia, the US and Brazil will cause prices to decline modestly.”
At the same time, the number of cattle on feed was also forecast to slip from a lofty 960,000 head in the 2015 December quarter to about 900,000 by December 2016.
“While this is a six per cent decline ... numbers on feed will still be significantly greater than the pre-drought (pre 2014) five-year average of 800,000 head,” he said.
He said behind the continued high number of cattle on feed would be the desire for processors to limit the affect of falling cattle slaughter on beef production by looking to secure animals in a more consistent manner.
“The expected record cattle prices will also provide producers with the incentive to enhance weight gains,” he said.
Export markets were likely to take about 70 per cent of productions in coming years, placing pressure on domestic beef prices.
Mr Thomas said beef and veal exports would slip 18pc in 2016 to 1.05 million tonnes (shipped weight).
This figure was lower than the records set in the past three years, but still higher than any volumes recorded before 2013.
“The third year of tariff reductions into Korea, second to Japan and second to China will also work in Australia’s favour, and again be beneficial at time of heightened competition,” he said.
The export of live cattle would also be hit by tighter supplies and was forecast to dip 17pc in 2016 (year-on-year) to one million head.
“While the 2016 forecast is a decline, live cattle exports are still forecast to account for 12pc of total cattle turnoff, rather then the 10-year average of 9pc, indicating slightly stronger demand for live animals than boxed beef, compared to the previous years,” Mr Thomas said.
Indonesia and Vietnam were expected to be the main live export markets in 2016.
