Australia's beef cattle prices are expected to remain well above average for the first half of this year, the country's agricultural bank Rural Bank said in its 2022 Australian agriculture outlook.
Rural Bank expects Australian beef production to rise by 12pc in the first half of 2022 as cattle reach slaughter weights and herd numbers grow following a rebuild that led to a 36-year low in slaughtered cattle in 2021. The herd rebuild was required after the 2017-19 drought forced farmers to offload breeding cattle because of a lack of feed and water. This herd decline was compounded by breeder cattle lost in flooding, especially is northwest Queensland, in 2020-21.
Australian beef production is expected to reach 1.5mn t in 2022, leading to a 15pc increase in beef exports across Australia from a 36-year low in 2021. South Korean demand for Australian beef is anticipated to remain solid throughout 2022, with exports to South Korea rising by 8pc last year. Both China and Japan imported less Australian beef in 2021, although the report forecasts that beef consumption in China could rise by 4.3pc in 2022. But it remains unclear how much access Australian exporters will have to this market given the trade tensions between Beijing and Canberra.
Rural Bank expects beef production to decline globally by an estimated 4pc in 2022, largely because of softening beef production in the US caused by tighter cattle supplies putting downward pressure on slaughter rates.
High rainfall over the past two months has led to an abundance of feed in paddocks, prompting farmers to keep cattle on farm, while restocking demand continues to be strong leading into the first half of the year. Rural Bank expects cattle prices to remain stable in January-March after the last two seasons of increasing prices. The major risks to this outlook are staff shortages and abattoirs that could create supply chain uncertainty, according to market sources.
"Australian cattle prices have continued to break records on the back of improving seasons, reduced supply and increasing demand both domestically and Internationally. As a result, restocking demand is expected to remain strong and will underpin above-average cattle prices for the foreseeable future," said Mark Pain, Rural Bank's regional manager of agribusiness for Queensland and Northern Rivers, New South Wales.
