ABARES has held firm to its earlier cattle price forecast for 2017-2018 in its December quarter commodity forecast report released this morning.
ABARES expects the weighted average saleyard price of beef cattle to average 465 cents per kilogram (carcase weight) for 2017-18.
That is the same price level it forecast prices for 2017-18 to average in its previous forecast released in September.
ABARES forecast of a 465c/kg price average is 13 percent lower than prices averaged in 2016-17, and would represent the largest year-on-year decline since 2002-03, when the weighted average saleyard price fell by 19 per cent.
But, if realised, the 465c average still remains 23 per cent higher than the 20-year average.
ABARES attributes the forecast fall to lower prices in export markets due to: increased competition from other beef producers, particularly in the Japanese and US markets
Increased turn-off in major cattle-producing regions of Australia, principally Queensland and New South Wales, which is expected to put downward pressure on domestic prices.
Other key points from this morning’s forecast for 2017-18:
Cattle slaughter to increase by 9pc to 8.1 million head. The increase will consist mainly of bullocks and steers, reflecting retention of females for herd rebuilding
Cattle numbers to expand by 4pc to 24 million head, as relatively high cattle prices and favourable seasonal conditions incentivise breeding and herd expansion.
Beef production to lift 12pc to 2.3 million tonnes (carcase weight).
Adult slaughter weights to reach record average of 298kg – as a result of improved seasonal conditions, a relatively high number of cattle on feed and a declining share in the national kill of cows and heifers. The higher slaughter weights have contributed to the forecast increase in beef production.
Share of cows and heifers in the national kill to contract to 44 per cent, from a high of 51 per cent in 2014–15.
Value of Australian beef exports to increase by 12pc to $8 billion, driven by a 16pc rise in export volumes and partially offset by a 3pc fall in average export unit values. Export prices are forecast to average lower year-on-year across all major markets as a result of increased competition.
Beef exports to the United States forecast to increase by 27 pc to 260,000t but still 12pc below five-year average to 2016–17 (296,000 tonnes).
Beef exports to Japan are forecast to increase by 9pc to 300,000t, despite strong US competition, and reflecting strong consumption growth in Japan.
Beef exports to the Republic of Korea to decline 5pc reflecting increased competition from the US in the chilled beef market and strong competition from locally proudced pig meat.
Beef exports to China to increase by 15pc to 120,000 tonnes.
Live feeder slaughter cattle exports to increase 7pc to 875,000 head, on back of increased demand in Indonesia and Vietnam, driven by rising incomes, urbanisation and population growth.
Increasing cattle supplies in first half of 2018 and forecast lower imported beef prices in Indonesia are expected to place downward pressure on prices for Australian live cattle.
To read ABARES December quarter commodity report in full click here