AUSTRALIAN beef prices are forecast to increase by 3.5 percent in 2014-15 on the back of a 4pc fall in production as producers rebuild herds, according to the latest National Australia Bank Agribusiness Rural Commodities Wrap.
NAB also expects the A$ to depreciate in late 2014 and into next year. The cash rate is not expected to change until the end of 2015.
General manager of NAB Agribusiness, Khan Horne said the benchmark Eastern Young Cattle Indicator had grown moderately in 2014 and was now 3.7pc higher than the same time last year.
On Wednesday this week, as Beef Central’s home page graph showed the EYCI went close to reaching a 22-month high, hitting 358c/kg, before pulling back a little yesterday to 357.25c/kg.
“Average slaughter rates in the eastern states are currently 8.8pc higher in 2014 compared to the same period last year. Looking ahead, the supply of cattle will clearly be tighter over the next couple of years as the industry rebuilds the herd,” Mr Horne said.
In terms of exports, overall conditions in key international markets in 2014 had been favourable for Australian beef.
“Exports to the US have performed particularly well, with exports of hamburger beef filling the void left by the smallest US cattle herd in more than half a century,” he said.
To July this year, exports to the US grew 38pc year-on-year, with prices increasing 15.2pc in A$ terms over the same period.
“While it’s been a tough year for many beef producers, NAB has a very bullish outlook for the industry, buoyed by tight supply and strong demand conditions in key overseas markets,” Mr Horne said.
In other commodities, the NAB Rural Commodities Index fell for the third straight month in July, led by lower wheat, lamb, cotton and dairy prices. An improved supply outlook in the US, driven by improved weather, has put downward pressure on international grain prices. Overall, the index fell 2.9pc in both A$ and US$ terms.
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