Once-in-generation opportunity to shape Australian beef industry

Australia’s beef industry has a once-in-a-generation opportunity to shape its future as the country’s historically-low breeding cattle numbers slowly recover in the year ahead, Rabobank says in its newly-released Beef Seasonal Outlook for 2021.

In the report, titled Green Grass and Empty Pens, the agribusiness banking specialist says with Australia’s breeding cattle inventory beginning to recover from the lowest levels seen in decades, the industry is now in a “unique position” to reassess and pursue its future direction.

“A number of challenges currently confront the Australian beef industry, including high cattle prices for those trying to build stocks, low supplies and China trade access,” the report stated.

“Australia’s position in the global protein world needs to be considered in rebuilding the herd.  Are we going to be a supplier into high-quality niche markets, a commodity supplier of lean beef to global trade, an exporter of live cattle or exporter of value-added beef to trade markets?”

Rabobank senior animal proteins analyst Angus Gidley-Baird said decisions taken this year are not just about whether to restock at high prices, but also about which genetics, productions system attributes, feeding regimes, supply chains and end customers are needed to build a sustainable basis for the business in the future.

Overall, the outlook for the year ahead, the report says, will be characterised by very limited cattle supplies.  This will provide strong support for cattle prices, but also mean ongoing scarcity for restocking and fattening as well as challenge capital efficiency, with many plants and feedlots running below capacity.

Australia beef faces challenges on the global stage, the report says, with low supplies, higher prices, an appreciating dollar and reduced access to the China market all creating headwinds.

Export volumes to China – impacted by high Australian beef prices, low supplies and trade tensions – are likely to see a larger decline than the more stable and established markets of Japan, South Korea and the United States.

Live cattle exports will also be constrained by reduced cattle availability and higher prices in 2021, the Rabobank seasonal outlook says.

For Australian feedlots, the report says, fed-cattle prices will need to hold up to support high feeder (cattle) prices.  And, positively, this is forecast by the bank.

Bank analysis of regional conditions around Australia, undertaken for the report, showed rebuilding of herds and restocking of properties underway, but not consistent across the country.

And low intentions to sell breeding cattle suggest breeding replacements is the preferred option for producers across Australia, which would prolong the re-build phase.



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