Record cattle prices costly for industry
Australian cattle is some of the most expensive in the world. But the dearer our red meat becomes, the more at risk the industry is internationally. Here’s what an industry expert has to say.
CATTLE prices have once again surged to record highs, continuing the trend seen in the past 12 months of an increasingly expensive indicator.
But the more expensive Australian cattle becomes, the more at risk the industry is of losing market share internationally, according to one industry expert.
The Eastern Young Cattle Indicator reached a new high earlier this week of 873.75c/kg.
This time last year, the EYCI was 525.25c/kg, more than 340c/kg less than today’s price.
Charles Stuart McVilly branch manager Alister Nash said prices at saleyards continued to be driven by the restocker movement.
“Parts of the country such as New England, they were exceptionally bad, they must have just about destocked entirely,” Mr Nash said.
“The rebuild is going into that. But to me it seems the feedlot industry is driving that. A lot of cattle are being bought to go on feed, that seems to be where the cattle is going.”
Thomas Elders Markets livestock analyst Matt Dalgleish said prices were beginning to reach “beyond what I would have suspected would make rational sense”.
With Australian cattle now some of the most expensive in the world, Mr Dalgleish said the livestock industry could be affected in the long term, with the potential for US red meat exports to undercut Australian exports.
“The US has never been able to penetrate much into China. But there’s phase one of the trade deal (between the US and China) which has allowed the US to gain a toehold in China,” Mr Dalgleish said.
“Meanwhile, we have some tensions with China already, and having a competitor like the US getting into the Chinese market, for me it’s a long-term concern, it could be the case where it makes life difficult for Australia.”
Australia’s record-breaking cattle prices, coupled with the reality of the US heading into a drought-induced destocking phase, could be bad news for Australia, Mr Dalgleish said.
“The impact is twofold … the Australian dollar is also continuing to rise. So not only are domestic cattle prices beginning to rise, it’s also other associated things like the dollar situation, and the US being more and more competitive … there is the potential loss of some market share,” Mr Dalgleish said.
Mr Dalgleish said the “only saviour” for the Australian red meat industry was tighter supply of domestic cattle could see a reduction in export volumes, with the potential to cushion the industry from the impact of high prices.
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