RABOBANK’S Angus Gidley-Baird spoke at the Flinders Beef Day on the future of the beef industry and told producers he believed the Australian red meat prices will remain strong for the rest of the year and into next year.
“The Australian red meat sector prospects are set to stay positive for 2015, with strong cattle and sheep prices to remain healthy” was the message he presented to Flinders beef producers on the trends and developments on the horizon for the Australian red meat sector.
He said that with the number of people Rabobank have ‘on the ground throughout the world gives him almost immediate information on what is happening in the industry from a global perspective.
Information out of Europe, the USA and Asia strongly suggest red meat demand is on the increase and it will continue, particularly in China for many years.
Interestingly an MLA study shows a drop of 4kg/year in the red meat consumption by Australians. Beef prices and the high unemployment are said to be a factor in this.
Boxed beef demand has grown in most of our markets and there have been record volumes exported to the USA during 2014 (583,397 tonnes) and an expected 582,000 tonnes for 2015.
This is despite the projected number of cattle slaughtered in 2015 dropping to 9,000,000 cattle from 9,200,000 in 2014.
Because of the USA’s declining heard and that most of the beef there is higher fat content, feedlot cattle and the clean, green image of Australia’s lower-fat, grassfed certified Australian beef has become popular among the health conscious there. That market is so strong in the USA that there is fast-food chains that buy only Australian grass-fed fed.
The Chipotle franchise advertises “Even though our loyalty is to American ranchers… we decided to take this opportunity to start sourcing more truly grass-fed steak (from Australia)”
“We have also been fortunate to have had beef available while the USA had a shortage and now the exchange rate is down, the US will most likely continue the trend,” Mr Gidley-Baird said.
In regards to the live export industry, Mr Gidley-Baird posed the question ‘Will the live export become the mainstay of the Australian beef industry?”
He noted that although the percentage of live export cattle sent to Indonesia was declining, that country was still our biggest live export market by far. (See graph)
“If China comes into the market, Australia may not have enough cattle to supply the market – the way things are trending with the live export to Indonesia, 700,000 cattle per year may become the norm,” he said.
“Graziers will need to make a decision as to which market they will be targeting – live export of slaughter,” he said
He added that the recent reduction of the cattle herd and possible improved seasons will lead to a contraction in Australia’s beef production in 2015, which is likely to further ‘test’ world prices.
“Looking at the last two drought periods in Australia, prices increased from the bottom of the market to the top by as much as 80 per cent,” Mr Gidley-Baird said.
“In 2015 however we have a stronger case for higher prices with high world beef prices, tight global supply, strong demand from US and China and a depreciating Australian dollar.”
Angus Gidley-Baird says it’s time for Australian producers to get a “piece of the action”.
