Markets

Real cattle prices highest in 30 years: MLA

Meat & Livestock Australia, 02/07/2015

Not only are cattle prices currently at record highs in nominal terms, after accounting for inflation real prices are the highest they have been in 30 years, Meat & Livestock reports.

As illustrated in the below chart, 1, so far this week, yearling trade steers (330-400kg, C3) have averaged 562¢/kg cwt nationally.  After removing the effects of natural increases over time (inflation), this puts farm gate prices at levels not seen since 1985.

 

 

Historical Yearling Steer Prices July 2015

In fact, in today’s dollars, national trade steers have only averaged more than 500¢/kg cwt twice in the past two decades, in 2001 and 2005.

The increase in 2001 occurred off the back of three wet years, 1998-2000, a falling A$ and strong export demand from the US. In 2005, cattle prices were supported by increased export market share in Japan, following BSE trade restrictions on imports from the US.

The latest rise in Australian cattle prices has occurred as a result of short term rain relief across parts of the eastern states, a weakening A$, high global cattle prices and strong export demand for Australian beef. The rise has also occurred in the context of a much anticipated contraction in supplies once Australia, particularly Queensland, phases out of drought and beef production declines.

Looking beyond 30 years, current prices would need to get to 700-800¢/kg cwt to be comparable with the highs of the 1970s however, as outlined in The history of Australian cattle prices since 1970, during the beef crash prices also hit record lows.

Even though cattle prices were depressed over the past two years, as a result of prolonged drought, given the strong export market and current trade agreements, real prices were not as low as previously experienced.

Source: Meat & Livestock Australia

HAVE YOUR SAY

Your email address will not be published.

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

  1. Peter Williams, 03/07/2015

    Joe you are already a price taker and if you think MLA are here to help then you are in for a rude shock some day.

  2. Joe McClymont, 03/07/2015

    You say that’s a “Sure thing,” with some confidence, Peter. Exactly what evidence do you have to support it?
    Are you suggesting it’s better to do nothing, and simply wait for the day when global demand patterns might change, rather than trying to enhance returns to producers through some marketing and R&D effort? I for one do not want to become a commodity supplier, and the more we can do to portray Australia as a world’s best practise, premium supplier the better.

  3. Christopher Leeds, 03/07/2015

    Still got a long way to go to reach 1973 or 1979 levels!

  4. Peter Williams, 03/07/2015

    Well .. the only sure thing I can say about this is that MLA had nothing to do with the price rise.

Get Beef Central's news headlines emailed to you -
FREE!