Welcome to the April 2019 edition of Beef Brief. When the Eastern Young Cattle Indicator recently fell to its lowest level since 2015, it confirmed the stress our markets have been experiencing.
Prevailing drought across much of Australia’s beef heartland has forced producers to destock, placing large numbers of cattle in the marketplace. Reflecting the season, many of the cattle sold have been in light condition, and what limited demand exists for ‘out of spec’ types has been overwhelmed.
The extent to which processors, lot feeders and live exporters have provided demand in recent months has been a saving grace for producers. If not for this competition, prices would have dropped further.
Whether it is drought or the flooding rain we’ve seen over summer, our market is never immune to twists and turns in the season. Supply driven price reductions, and now the rapid price recovery following some meaningful rain in several key regions (as shown in this graph), are testament to how the market is intrinsically linked to the weather.
Hopefully further rain reduces pressure to destock and helps stabilise the market. As we’ve seen in the past, when the drought does break, supply will tighten and farm-gate prices will rise. This will be welcomed by producers, but it will put immense pressure on the rest of the supply chain, which we must be of mindful of because producers’ fortunes are linked closely with those who purchase their cattle.
A pillar of Cattle Council’s Beef Industry Strategic Plan is to grow the productivity and profitability of the whole industry, but when drought hinders production, our ability to realise these objectives is restricted.
Regardless, Cattle Council works with other industry stakeholders to develop our markets, uphold the integrity of Australian beef and strengthen the resilience of the businesses and families who produce it. That way, whatever the seasons throw at us, we’re better placed to ride out the tough times and thrive when seasonal and market conditions are right.
Margo Andrae – Cattle Council CEO