MLA predicts ‘significant’ increase in cattle prices
16/07/2014
The prospect of strong demand and a sustained contraction in supplies should be welcome news for producers, with the most likely scenario for prices to play “catch up” to the recent rise in global beef and cattle prices.
MLA's analysis indicates that there is the “potential” to increase by up to 40% on the average prices for the first half of 2014 – bringing Australian cattle prices back in line with its long-term global correlation. Cows seem likely to lift the most, followed by young cattle, it said.
With the outflow of cattle exceeding the additions, the liquidation of the cattle herd has been rapid, with Australia’s herd forecast to fall to a two-decade low of 26.1 million by July 2015.
The question is whether cattle producers across Australia, and particularly through the worst of the drought-affected regions, will have the ability, and the cattle, to capitalise on higher prices, said MLA.
As has been the case in recent years, the ability for producers to service rising debts will be a massive consideration in the selling versus rebuilding balance of each producer, and will hinge on seasonal conditions.
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