The situation is reversed in Australia, with relatively high cattle stocks and a widely held expectation that supply will increase over the next several years. “Although slaughter remains at higher-than-expected levels in the US, declines in the beef cattle herd have raised questions about future supply among US lotfeeders and packers, creating an incentive to secure supply quickly and inflating the price,” MLA said. The rapid increase in the US cattle premium since mid-2022 (yellow line) is due to increases in US prices and the decline in Australian cattle prices (green line) occurring at the same time, MLA said in yesterday’s report. ![]() However, it’s also worth noting that this comparison is standardised in Aussie dollars, and would look somewhat different if measured in $US or other currency. Worth noting on the two graphs above and below, however, Australia has had two periods (2020-22, and briefly in 2016, during the previous drought/recovery cycle either side of the Pacific) when it enjoyed the highest slaughter cattle prices in the world (among major exporters, at least). Normally running between 50–100c/kg, large price movements in Australia have driven prices well out of this range since late 2022. In late May 2023, the spread between the US fed steer index and the Australian heavy steer index reached A304¢/kg, a new record for the relative gap between the two indexes. US fed steer prices have now reached record peaks, while South American prices have remained consistent, with strong import demand from China underpinning prices despite high inflation in their domestic markets. It’s producing exactly the same effect that the Australian beef industry experienced in its own post-drought recovery period, last year and the year before.Īs supply gained momentum, the first half of 2023 saw rapid declines in Australian cattle prices that stand in stark contrast with prices in other major beef exporters such as the US and South America. When measured in Australian currency, c/kg terms, the price gap has never been wider over the 12 year period covered in the graph below – published as part of Meat & Livestock Australia’s mid-year Industry Projections report.Īs highlighted in this earlier article published last week, US cattle prices have soared to record levels over the last few months, as supply hits the wall, following last year’s (and continuing into early this year’s) devastating US drought. ![]() ![]() CURRENTLY at opposite ends of the drought/recovery cycle, a yawning gap has emerged between slaughter cattle prices in the United States and those in Australia.
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