Increased export demand is expected to push average saleyard cattle prices three percent higher to 305c/kg in 2013-14, but much will hinge on seasonal conditions.

From a fundamental demand perspective, the outlook for beef cattle prices in 2014 in ABARES's latest Ag Commodities report is positive.

Supported by an assumed lower $A, Australia is expected to enjoy higher demand for beef, particularly from emerging markets, and Indonesia is also expected to take a lot more cattle from the north than it has in recent years.

With domestic demand likely to stay relatively unchanged, the proportion of Australian beef and veal that is exported in 2013-14 is expected to rise to 70pc.

The Australian beef cattle herd is forecast to stand at 25 million head as at 30 June 2014, 2pc down on the previous year, reflecting dry conditions and significant increases in slaughter and lower calving going into 2014.

The elephant in the room remains, even more than usual, seasonal conditions.

With drought impacting more than 60pc of Queensland, which is home to around half the country’s beef cattle herd, rainfall trends in the sunshine state will significantly influence price trends in the first half of next year.

If dry conditions persist, there will be continued forced offloading of female cattle in particular, and ABARES says prices will be lower than those it has forecast.

Key points from ABARES’s December Quarter Ag Commodities report include:

Trends from first four months of 2013-14:

• The weighted average saleyard price of beef cattle was 293c/kg dressed weight. (This was after a fall of 10pc to 297 cents a kilogram in 2012–13, the lowest in real terms since 1998–99).

• Cattle and calf slaughter increased by 16 per cent year-on-year to 3.3 million head.

• There was a 7 per cent increase in male cattle slaughter to 1.6 million head, a 28pc in female cattle slaughter to 1.4 million head and a 14pc increase in calf slaughter to 324,000 head.

• Reflecting the higher cattle slaughter, beef and veal production over the first four months of 2013–14 increased by 12 per cent year-on-year to 845 000 tonne (carcase weight).

• The higher proportion of lighter female cattle slaughtered contributed to average slaughter weights declining by 4 per cent year-on-year to 255 kilograms.

Forecast for 2013-14 as a whole:

• Cattle and calf slaughter is forecast to rise by 6 per cent to 8.9 million head.

• Beef and veal production is forecast to rise by 3 per cent in 2013–14 to a record 2.3 million tonnes.

• The beef cattle herd is forecast to be 25 million head as at 30 June 2014, 2 per cent lower than the previous year. The decline reflects the significant increase in slaughter, and lower calving going into 2014.

• Australian beef and veal exports in 2013–14 are forecast to rise by 7 per cent t a record 1.1 million tonnes (shipped weight), reflecting growing demand from emerging markets.

• With domestic beef demand largely unchanged, the proportion of Australian beef and veal production that is exported is forecast to increase in 2013–14 to around 70 per cent.

• Increased exports to the United States, China and the Middle East are expected to more than offset forecast lower exports to Australia’s largest market, Japan.

• The value of Australian beef and veal exports, supported by an assumed lower dollar, is forecast to rise by 12 per cent to $5.4 billion.

• Exports to Japan are forecast to fall by 6pc to 280 000 tonnes (shipped weight), the lowest since 2002–03, as competition from US beef exports increases. Exports of US beef to Japan since the relaxation of BSE-related restrictions in February 2013 have increased by more than 50 per cent year-on-year, coming at the expense of Australian beef exports.

• Australian exports to the US are forecast to increase by 11 per cent in 2013–14 to 230,000 tonnes (shipped weight), reflecting a decline in the domestic supply of manufacturing beef in the United States and an assumed depreciation of the Australian dollar against the US dollar.

• Exports to China expected to increase by 74pc to 160 000 tonnes (shipped weight), reflecting growth in demand for beef in China exceeding growth in local production.

• Exports to South Korea forecast to increase by 5pc to 145,000 tonnes (shipped weight). Korean demand is largely for frozen cuts, which Australia can supply at prices 10-20pc lower than the US.

• Exports to South-East Asia, primarily Indonesian, are forecast to increase by 6pc to around 100,000 tonnes.

• Exports to the Middle East are forecast to increase by 15pc to 55,000 tonnes (shipped weight), with Saudi Arabia, the United Arab Emirates and Jordan accounting for most shipments to the region. 

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