THE average saleyard price of steers and cows is forecast to fall during the remainder of 2020–21 after reaching record highs in the third quarter of 2020.
ABARES’ December Quarter commodity outlook predicts that the weighted average saleyard price of cattle will average 23pc higher in 2020–21, which is higher than previously forecast although it is expected to finish the financial year well below this level.
The high price of Australian cattle is forecast to compensate for a decrease in exports, leaving the gross value of production (GVP) only slightly lower than 2019–20 (a nominal GVP record year). This difference between Australian and global prices has put pressure on processors and exporters.
ABARES notes that herd rebuilding has increased domestic demand for cattle as a result of favourable seasonal conditions.
Competition from feedlots and farmers seeking to restock in eastern Australia has pushed up prices for young cattle for restocking relative to older cattle for processing.
In October 2020, the Eastern Young Cattle Indicator exceeded 800 cents/kg for the first time and is expected to fall in 2021.
Global demand for beef has been resilient in 2020 during the COVID-19 pandemic, but rising production will slightly reduce global prices for the rest of 2020–21.
Favourable conditions support herd rebuilding
Herd rebuilding has increased domestic demand for cattle following favourable seasonal conditions.
High rainfall totals across most of northern and eastern Australia has seen pastures continue to recover after successive dry years.
Higher prices in areas that have received substantial rainfall have supported prices in areas with lower rainfall totals – the Western Young Cattle Indicator has followed the Eastern Young Cattle Indicator upwards despite poor pasture growth. The AussieGRASS pasture growth model suggests a high likelihood of above-average pasture growth to January 2021 across eastern Australia and far northern Australia.
Pasture growth is expected to be median or below median for Western Australia, central Australia and much of Tasmania.
Chance of pasture growth exceeding median, November 2020 to January 2021
Sources: AussieGRASS model
To read ABARES’ full December Quarter outlook for the beef sector click here