Rabobank tells northern producers of potential opportunity for beef in US market

During a presentations at Julia Creek, Hughenden and Charters Towers, producers heard an update on 'How Australian Agribusinesses will benefit in 2024 from Economic and Agri Trends' from RaboResearch general manager of Australia and New Zealand, Stefan Vogel

During the presentation, Mr Vogel discussed opportunities in the beef market as well as cost trends. Mr Vogel said the price of beef across Australia was significantly lower than expected.

"When we look at it, on one side we've seen our slaughter numbers are stronger than in the last two to three years but are closer to the five year average, and not near the top of the range compared to the 10 year average," he said.

"We also see that cattle that are slaughtered are a bit heavier than typically, so beef production is still going strong in the region and part of it is driven by the drier conditions we had. Some properties have sold a few more head than they would have if the weather had allowed for keeping them.

"The other part is now we have a sizeable beef production we need to look at what is happening in the destination markets and products that we are sending abroad.

"Thinking of markets like Japan, or South Korea, we see that the inventories of beef in those countries are still very strong and has partly to do with the economics in those countries. Clearly if you look across the world, inflation in many parts of the world had been high, beef and lamb is usually the more expensive meat you can find in the supermarket, so the consumption growth is also partially suffering a little bit from economic headwinds we've had."

Looking into 2024, Mr Vogel said Australia could get a helping hand from the United States of America.

"We have experienced slaughter numbers fall for the last couple of months which is good news for us, because locally the price for meat produced in the US has already increased," he said.

"While the price for similar type meat that is imported has not yet followed, but that might be something in the next few months se the price for imported goods rise a little bit.

"We already have strong exports of beef out of Australia over to the US, but with a bit of luck we might get some more volumes into that US market and that could be the helping hand for the beef market here to come."

Looking into costs for feedlot operators, Queensland could be sitting on some of the most expensive grain in the country, according to Mr Vogel.

"We have seen global prices come down substantially, if you look at global wheat or global corn prices they have all traded down in the last 12 months from really high levels. While in Australia it is showing the opposite picture," he said.

"Australia especially up here in Queensland, we have seen prices rising than other parts of the world, so Queensland is stilling on some of the most expensive grain in the country just because the local consumption is there.

"The crops this season will probably be 35 per cent lower compared to where we were last year, but last year was a good crop. Within Australia we still think the crop production is close to the five year average, close to 50 million metric tonnes of grain.

"The harvest is ongoing for grains but as long as the dryness hangs around we will see, in those feed markets, that the demand will be there and support prices further."

As for interest rates, Mr Vogel predicted the RBA would cut interest rates towards the second half of 2024.

"We have seen that the RBA in Australia has increased the cash rate by another 25 points so we are sitting at 4.35 per cent," he said.

"We as Rabobank have forecast for several months that there would be a rate increase, we thought that would be the last one but given the wording of the RBA that we believe we could see one more increase in the coming months.

"We expect that interest rates will remain rather flat for most of the first half of 2024 and that we will only in the later half of 2024 see interest rates to be cut again.

"Meaning by the end of 2024 we will sit somewhere around a high three point something percent, close to four per cent but we are not a believer that interest rates will be cut very quickly next year."