What factors are driving a cow price lift?

An increase in cow prices has been welcomed by beef producers, but may not be a sign of increased demand from Australia’s biggest export market.

A lift in cow prices is more to do with confidence than any pull through for manufacturing beef on the export market.

And while expectations are that demand for 90CL beef will lift on the back of herd rebuilding in the United States after years of drought, it is not playing a role in prices here yet.

The national processor cow price closed on Monday at 165c/kg liveweight and has risen 8c/kg in the past week and 19c/kg in the past month.

Rabobank senior animal protein analyst Angus Gidley-Baird said the recent lift in cow prices in Australia was not a result of any price change in the US for manufacturing beef.

“The US import price (for cow beef) in $A terms has been flat for the past six weeks, trading between 830c/kg and 847c/kg,” Mr Gidley-Baird said.

“This is above the five-year average so it is a good price, but I think the reason for cow prices lifting here is more to do with producer sentiment and producers buying and selling activity.

The national processor cow price closedd on Monday at 165/kg liveweight and has risen 8c/kg in the past week and 19c/kg in the past month. Picture: Zoe Phillips.

“It seems that a little bit of confidence has returned to the market and that is helping prices”

And as the price rises, Mr Gidley-Baird said it would better compensate those who were forced to sell rather than tempt those who had a choice on whether to hold or not.

US-based analyst Len Steiner said imported beef prices were losing ground as US domestic lean beef prices moved sideways.

“Buyers see little reason to bid on forward imported product, Mr Steiner said.

“Ample supply of beef from a number of areas has US buyers comfortable with their current position and unconcerned about imported availability, at least in the short to medium term,”

Mr Steiner said

Australian beef imports are expected to remain high early next year and will be competing with beef available from New Zealand, especially bull meat, and stocks from South America.

“In this environment, the discount of imported beef may remain unusually wide for longer than some market participants think,” Mr Steiner said.

Sales of Australian cow beef have contributed in a lift in exports in October. Beef exports US and Canada were up 118 per cent year-on-year to 31,577 tonnes, Meat and Livestock Australia global supply analyst Tim Jackson said.

“This has made North America the largest market for Australian beef this year,” Mr Jackson said.