The Australian cattle market could eclipse the sky-high prices seen in the past 12 months, with competition set to intensify in 2016.
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Meat and Livestock Australia (MLA) is predicting cattle numbers will drop to a 20-year low in the next two years, as producers continue to offload stock due to strong prices and the ongoing drought, particularly in Queensland.
The national herd is expected to fall to 26.2 million head by June 30, 2016, before gradually declining again in 2017 to 25.9 million head.
“If this occurs, it will represent a 3.4 million head or 12 per cent fall since 2013 and the lowest herd for 24 years,” MLA Manager of Market Information, Ben Thomas said.
Tightening cattle supplies combined with re-stocker demand and a low Australian dollar are among the factors to help push Australian cattle prices higher than last year.
Numbers dropped at the Gunnedah cattle sale this week from 2378 two weeks ago to 1633 as demand grows and competition stiffens.
“What we’ve see in the last couple of years - especially the way the seasons have been - is we are certainly decreasing the herd numbers,” Elders Gunnedah Stock and Station agent Dave Simpson said.
“They’ve decreased fairly substantially because people have had to deal with seasonal conditions and not being able to hold cattle that they may have kept in herd to breed.
“Even if they did want to keep them, it’s been hard to knock back the prices.
“The demand is just so high and it’s forcing a lot of producers into selling. They’ve made as much as they’ve ever made.”
Last year the market saw prices skyrocket with good cows making up to $2.60 a kilo, heifers $3.30 and steers $3.60, however they have come back slightly in recent months.
As expected, Tuesday’s Gunnedah sale, saw the re-stocker market remain strong and there was a lot of competition among feedlotters for cattle.
Heifers made $3.15 for the heavier feedlot cattle and steers collected $3.40.
The demand now for re-stocker cattle is predicted to continue which Mr Simpson said will help drive the market.
“If it’s strong and there’s a lot of confidence out there from producers, that will set the benchmark for it.
“It could drive prices to where we haven’t seen them yet.”
Meat and Livestock Australia said the main price risk factors remain further unexpected falls in the US beef market or an unexpected strengthening of the Australian dollar.
The market is also expected to see a shift in the proportion of cattle exported live compared to cattle processed.
