Sunday 23rd Sep, 2018

Here comes the beef

Photo: NSW Farmers
Photo: NSW Farmers

THE outlook is bullish for Australia’s beef producers and exporters, as the Australian cattle herd has been showing signs of recovery, according to Rabobank’s latest Beef Quarterly report.

After nearly two years of decline, beef export and production volumes are posting increases in recent months.

However, questions linger about exactly how long it will take for Australia to increase production to rebuild its presence and competitiveness in global markets.

The Rabobank report says the dry seasonal conditions across much of Australia will limit the ability to rapidly increase production and a more gradual increase into global markets is expected.

Lead author on the report, Rabobank senior animal proteins analyst Angus Gidley-Baird, said the recent lift in production and exports was an “encouraging” sign for the beef sector, with volumes returning to levels more in line with the longer-term average.

“Beef production has fallen for 22 consecutive months right up until June of this year – when production posted an increase of 11% year-on-year, followed by a 20% rise in July,” he said.

Mr Gidley-Baird said Australian beef production is expected to come to around 2.1m tonnes in 2017 and – while this is a big drop from the volumes produced in 2013, 2014 and 2015 – it is a return to “normal” levels seen in 2008 to 2013.

“In line with the recent lift in production, beef exports have followed suit, with exports also staging a recovery since June to post a significant 22% increase in August,” he said.

Rabobank’s report said a more normal production and export schedule and declining Australian cattle prices are expected to see Australia firm up its main export markets of Japan and South Korea in the medium term.

However, Mr Gidley-Baird said competition with the US was expected to intensify, with the American herd growing.

“Australia really needs to watch the US as a key competitor,” he said.

“This is anticipated to be an increasingly important issue over the next five years as Australia rebuilds its herd, because if export volumes reach very high levels, it could spark volatility in the market, particularly if there is a trigger such as drought or a change to trade regulations.”

Looking to the longer term, Mr Gidley-Baird sees Japan, the US, South Korea and China remaining strong destinations for Aussie beef, while growth in the Chinese market will be tempered by competition from the US and South America.

“In this competitive market, South East Asia may well be the biggest opportunity for Australian beef, not only from a geographical perspective,” he said.

“But also the relatively small size of the individual countries within this region may mean it is not as attractive for the US and Brazil, who favour large volume markets.”

Send this to friend