Banking on a gradual cattle herd recovery

Banking on a gradual cattle herd recovery


Beef
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The young cattle market slipped a little further in the past week and the Eastern Young Cattle Indicator is now lingering just above 500 cents a kilogram (carcase weight) mark.

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THE young cattle market slipped a little further in the past week and the Eastern Young Cattle Indicator is now lingering just above 500 cents a kilogram (carcase weight) mark.

But, the flip side is that Australia’s depleted herd may be showing early signs of rebuilding, with beef production and export volumes posting an increase in recent months, according to Rabobank’s Beef Quarterly report.

Rabobank senior animal proteins analyst Angus Gidley Baird said after two years of decline, the lift in production and exports suggests Australia’s beef sector was “on the road to recovery”, but questioned how long it will take for Australia to increase production to rebuild its presence in global markets.

Mr Gidley Baird said the dry seasonal conditions prevailing across much of Australia would limit the country’s ability to rapidly lift production, and a more gradual increase into global markets was expected.

“Nonetheless, the recent lift in production and exports is an “encouraging sign” for Australia’s beef sector, with volumes returning to levels more in line with the longer-term average,” he said.

“During Australia’s beef cattle herd liquidation that took place between 2013 and mid-2016, more than four million head of additional cattle were taken out of the system, driving up domestic beef production to record levels of about 2.5 million tonnes a year. 

“Since then production has fallen for 22 months, to June 2017 – when production posted an increase of 11 per cent year-on-year, followed by a 20pc rise in July.”

He expected beef production to come in at about 2.1 million tonnes in 2017 and – while this was a big drop from the volumes in 2013, 2014 and 2015 – it would be a return to those levels recorded in 2008 to 2013.

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