Prices up 16 per cent, but global economics and politics to impact cattle

A re-elected Donald Trump poses a risk to Chinese demand for Aussie beef, an analyst has warned.

Mid winter cattle prices have lifted across the board with the benchmark Eastern Young Cattle Indicator gaining 73c/kg in the past month to sit at 664c/kg on Tuesday.

The EYCI is now 16 per cent up year-on-year and the cow indicator is 25 per cent higher.

And as recent rain across most major cattle regions points to the promise of a reasonable spring, energy has been injected into the market for light store steers and heifers.

However, analysts are warning that while strong export demand for Australian beef has sustained price rises to date, some headwinds may temper international demand going forward.

Rising US imported beef prices remain a big positive factor, but if the Reserve Bank of Australia lifts the cash rate at its meeting next week the Australian currency was likely to rise.

According to the Commonwealth Bank, any strengthening in the Aussie dollar would be likely to put downward pressure on export demand and cattle prices.

Exports to China were also likely to be impacted due to global political factors, according to Commonwealth Bank agricultural economist Dennis Voznesenski.

He said Chinese consumer sentiment was “worsening with each new month of data”, and the Australian sector should watch for a decline in import demand.

China had been increasing its imports, despite lacklustre domestic demand, indicating the Chinese government may be stockpiling as a safeguard measure against trade uncertainty, in case Donald Trump was re-elected as US president.

On local supply dynamics, Mecardo analyst Olivia Agar said while there had certainly been a lot of cattle sold off early from southern regions, in the north there remained “plenty of cattle”.

This, and good pasture growth there, as well as high numbers of cattle on feed, were likely to put “some balance in the market”, she said.

Elders Albury manager Matt Tinkler.

Elders Albury manager Matt Tinkler said price movements would be determined by the season in the south and availability of grass.

“We need to factor in that in the north (NSW and Queensland), cattle there have had a good start so will come out of the system at some stage,” Mr Tinkler said.

“But we also know that due to the dry season in parts of Victoria, large amounts of cattle were sold early so that will have an impact on markets too.”

Mr Tinkler said supply of grass-fed cattle in prime condition through spring could be short supply.