NETHERLANDS, Utrecht. The future of the Australian beef industry is looking bright. Key fundamentals for a strong Australian beef industry –consisting of strong international demand, constrained global supply, a depreciating dollar and trade agreements– are falling into place.
The Australian beef industry has long been exposed to the supply-and-demand fluctuations experienced by global drivers and local seasonal conditions. While depressed prices have been driven by short-term high domestic supply, the Australian industry is now in a position to capitalise on strong global demand, providing an opportunity to develop an industry with a premium, value-added product. This would ensure a more stable, long-term environment for the Australian beef industry.
“With strong fundamentals in place, the report looks at some of the opportunities and challenges for the Australian beef industry from a production, export and price perspective,” according to Rabobank Angus Gidley-Baird.
In detail, Australian cattle prices are expected to be 40 percent to 70 percent higher than the five-year average, which represents a range between A$5 per kilogram and A$6 per kg. cwt over the next 12 months, Meat + Poultry reports, referring to Rabobank's report. Rabobank said several factors support prices reaching these levels. Changes to country of origin labeling laws in the United States, strong demand for beef by US consumers and tightening supplies of Australian beef could lead to higher prices for Australian beef without compromising product competitiveness. Additionally, opportunities for improved demand situations through free trade agreements such as the ASEAN-Australia-New Zealand Free Trade Area offers Australia a wide range of export markets while lessening the industry’s exposure to market fluctuations. Gradual reductions in Australia exports of beef to the US will lead to transferring supplies to growing markets in China and Southeast Asian countries such as Vietnam and Cambodia.
Demand for beef is expected to continue growing in Indonesia, which will be the primary destination for Australian beef with a medium-term export volume of 700,000 to 800,000 head per year, Rabobank said in its report. However, political influences will be major headwinds for further development of trade in beef.