The weighted average saleyard price of cattle is forecast to increase by seven percent this financial year to 540c a kilogram, and to maintain the same average through 2017-18.

But prices are then forecast to decline over the medium term to an average of 465c in 2021-22 (in 2016-17 dollars), as Australian beef production and export volumes gradually expand, and increasing competition in international markets weakens export returns.

In its latest annual beef industry production and price projections released at today’s Outlook Conference in Canberra, ABARES’ commodity analysts offer their view as to how the arm-wrestle between limited supplies of cattle versus rising competition for Australian beef is likely to play out over the next five years.

They expect that limited supplies of cattle for slaughter will continue to keep saleyard prices at roughly the same levels for the next year or so, before increased supply after herd rebuilding, rising competition from cheaper beef produced in countries such as Brazil and Uruguay, drags prices lower.

Expanding US production is reducing demand for imported manufacturing beef.

Australia also now faces much stronger competition for a share of the US imported beef market, since Brazil regained entry to the US in Sep 2016.

The average unit value of imported Brazilian beef in the US the December 2016 quarter was US$4.01 a kilogram, 33pc below the Australian average of US $6/kg

Key points from today’s Australian beef production projections:

In 2016-17:

• Cattle and calf slaughter to contract 15pc to 7.5 million head
• Beef and veal production to fall 13pc to 2.0m tonnes
• National beef cattle herd to grow 3pc to 24 million head
• Beef and veal exports to fall in value to $7.1 billion (16pc below 2015-16)
• Exports to US to fall 42pc on 2015-16 volumes.
• Japan returns to largest share of Aus beef exports (with 26pc)
• Exports to Korea up 4.5pc to 197,500t
• Shipments to China down to 99,000t, reflecting export competition from Brazil (21pc cheaper than Aus), and Uruguay (66pc cheaper than Aus)

In 2017-18:

• Cattle and calf slaughter to remain firm at 7.5 million head
• Beef and veal production to increase 3pc to 2.1m tonnes
• Share of cows and heifers slaughter to remain low

 In 2012-22:

• Cattle and calf slaughter to increase to 8.8m head
• Beef and veal production to expand by 3pc/year to reach 2.3m tonnes
• National beef cattle herd to 26.6m head
• Value of beef and veal exports to total $7.1 billion (in 2016-17 dollars)
• Exports to Korea to grow to 232,000t/year
• China exports to grow to 126,000t

Click on table to enlarge

To read the full ABARES report click here

To view more charts click on arrows to scroll through images below: