Cattle prices remain strong in Australia

New post-Brexit trade deals could challenge Ireland’s position as the major beef supplier to the United Kingdom, offering potential opportunities for alternative exporters including Australia, according to Rabobank’s Q3 2020 Global Beef Quarterly report.

Ireland is currently by far the dominant supplier of beef to the UK, the report says, representing 70 per cent of total UK beef imports in 2019.  But the UK is also pursuing new trade deals with countries outside the EU, including major beef exporters such as Australia, New Zealand and the United States.

Rabobank senior animal protein analyst Angus Gidley-Baird said the UK represents a big, high-value beef export market. “Once outside the European bloc, we expect it to become the fifth or sixth largest beef-importing country in the world,” he said.

“The new trade deals under negotiation could challenge Ireland’s position in UK beef imports if the deals open the possibility of broader low or no-tariff access to the UK market for these other beef exporters.”

However, the newly-released report says, trade negotiations alone will not determine which countries will ultimately supply the UK beef market in the future, with consumer preferences (for locally-sourced product) and non-tariff barriers – such as entrenched existing market relationships between food retailers and processors and purchasing standards – playing a significant role.  “And these clearly do work in favour of current Irish suppliers,” Gidley-Baird said. 

For Australia, cattle prices remain very strong despite global COVID-19 disruptions and slowing economic conditions.  It expected prices to drift slightly lower, as COVID-19 continues to weigh on global demand, but limited domestic cattle supplies will minimise downside movement.

National cattle slaughter – at 612,000 head for the month of June –  was down 14 per cent year on year (YOY).  Year-to-date national slaughter (for 1H 2020) was down seven per cent on the same period last year, while beef production was five per cent down.

The current limited availability of stock meant there would likely be minimal decline in slaughter numbers as a result of the 33 per cent reduction in capacity in Victorian abattoirs due to Stage 4 lockdown requirements, the report said.

Reflecting the lower production volumes, Australian beef exports dropped 23 per cent YOY in July to 88,785 metric tons swt).  Big reductions were seen in the markets of Japan (down 24 per cent YOY), South Korea (down 14 per cent) and China (down 56 per cent). Export volumes to China had also been impacted by the suspension of Chinese beef export licences to four Australian plants in May and the triggering of safeguard tariff measures.

The appreciation of the Australian dollar in recent weeks was also compounding the higher prices and challenging the competitiveness of Australian beef, the report said.

New trade opportunities for red meat

Member for Capricornia, Michelle Landry, said the Government’s investment was designed to allow farmers to grow their businesses by facilitating new trade opportunities.

“2021 is an important opportunity to champion Australia’s fantastic beef products domestically and internationally,” Landry said.

“Rockhampton’s contribution to the industry is central, with Beef Australia facilitating new trade and export opportunities by connecting the local supply chain to international industry leaders.

“Preparations are well underway for the next event, which will feature more than 5000 cattle from over 30 breeds, a trade fair promoting more than 500 businesses; a symposium, seminars and property tours to deliver new research information to producers.

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“And let’s not forget Queensland is the epicentre of beef production in Australia, with more than 12,000 businesses contributing $5.47 billion to the national economy.”

Minister for Agriculture, Senator Bridget McKenzie, confirmed that the $3.9 million was designed to help showcase quality Australian beef to the world.

“This is an investment not only in Rockhampton—the beef capital of Australia—but in an industry that’s delivering economic benefits to Australia, to regional economies and to farmers’ hip pockets.

“Our government is backing Australia’s beef producers by helping to improve returns by maintaining and securing new export markets, and achieving lower tariffs through our free-trade agreements—particularly with Korea, Japan and China.

“We’re backing an industry that creates direct and indirect employment opportunities for around 404,800 people.

“The beef industry is a powerhouse of Australian agriculture, with cattle and calf production valued at about $10.8 billion, and beef and veal exports valued at almost $9.5 billion.

“Anything our government can do to support and sustain this significant contributor to Australia’s economy and the many thousands of people who work in it, especially during drought, is an investment in the future of agriculture.”

Drought-induced destocking of beef reaches record levels

Cow turnoff has reached record levels as severe water shortages across many key beef production regions have accelerated the pace of drought-induced destocking, according to Meat & Livestock Australia’s (MLA) Cattle Industry Projections August Update.

Cow and heifer slaughter reached 58 per cent of total adult cattle slaughter for three consecutive months from March to May, as many beef producers continue to destock or manage significantly depleted breeding herds.

MLA Senior Market Analyst, Adam Cheetham, said total Australian adult cattle slaughter for 2019 is now forecast to increase three per cent year-on-year to 8.1 million head.

“Elevated female slaughter and poor conditions have combined to drive average carcase weights lower so far this year to 282.5kg/head,” Cheetham said.

“Despite national slaughter being revised higher, the lower carcase weights have underpinned unchanged production levels at an estimated 2.3 million tonnes carcase weight (cwt), two per cent below the five-year average.

“The lot feeding sector continues to support national beef production and has been a critical link in the supply chain during the prolonged dry period. The number of cattle on feed reached a new record in the March 2019 quarter and has remained above the 1.1 million head mark for the fourth consecutive quarter.

“This number is expected to remain high, given the challenges of finishing cattle on limited pasture reserves.”

Cheetham said the national herd is estimated to have declined 7.3 per cent, to 26 million head for the year ending June 2019, while estimated branding rates have also fallen, reducing the number of calves on the ground this season.

“On the upside, prices for finished cattle have improved this year and are likely to find continued support given an expected tightening of supply during the remainder of the year,” Mr Cheetham said.

“This year has seen the largest premium between the heavy steer indicator and the Eastern Young Cattle Indicator (EYCI) in the last decade.

“Young cattle prices have been reasonably subdued and, until seasonal conditions allow restockers to re-enter the market with confidence, the store market is unlikely to see any significant price corrections. However, if a solid break in conditions were to materialise, there is the potential for young cattle and productive female prices to experience significant increases.”

Cheetham said demand for Australian beef has remained robust this year, supported by a depreciating Australian dollar and rising demand from China.

“In the first half of the year, Australia’s total beef exports increased six per cent and grainfed shipments reached record levels. However, coming up against some supply constraints in the second half of the year, 2019 exports are expected to finish the year steady at 1.13 million tonnes shipped weight (swt),” said Cheetham.

“Dry conditions have also supported cattle exports, with total shipments up 19 per cent in the first half of 2019. Cattle shipments are forecast to finish 2019 at 1.15 million head, up six per cent year-on-year.

“Beyond the weather, factors such as exchange rates, production in the United States and cattle price movements, trade developments and demand from China will remain important price drivers for Australian beef.”

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Australian Beef to fuel 2020 Australian Olympic team

Australian Beef will be an official partner of the 2020 Australian Olympic Team, giving Australian red meat a platform on the national stage.

The deal is being delivered with sponsorship from Meat and Livestock Australia (MLA).

The partnership will run from the end of November 2018 through to the Olympic Games to be held in Tokyo, Japan, in 2020.

MLA managing director Richard Norton announced the new partnership at the MLA 2018 Annual General Meeting in Canberra, being held as part of Red Meat 2018.

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“It makes sense that Australian Beef, renowned for its superior quality and nutritional properties should fuel the elite Australian athletes that will compete in the ultimate physical and mental contest,” said Norton.

“The partnership will complement and build on all MLA’s marketing and communications initiatives in the Australian market and include cross promotional opportunities in Japan, our beef industry’s largest and second largest markets respectively.

“In Australia, marketing activity will extend from television and social media right through to point of purchase material,” he said.

“Sports dietitians and nutritionists – with a reach that extends not only to elite athletes but right through to grassroots participation sports – will be the focus of MLA’s nutrition communications and education program throughout the Olympics partnership.

“Our partnership with the Australian Olympic team will help us to take the message of Australian Beef as part of a healthy diet to communities and consumers all over the country in the nearly two years until the Olympic Games,” said Norton.

Australian Olympic Committee chief executive officer Matt Carroll has welcomed the announcement as a perfect fit.

“Our partnership with Meat and Livestock Australia provides a significant boost to our Olympic Team as it prepares for Tokyo 2020,” said Carroll.

“We are focussed on giving every athlete the opportunity to excel at these games and that is only possible through the generous support of our partners.

“This is a perfect fit in every way as we prepare to send our team to show their quality in the cauldron of Olympic competition,” said Carroll.

Fitness tracker for cows to help Australian farmers

CSIRO, Australia’s national science agency, and agtech startup Ceres Tag have created a new type of ‘fit bit’ to help farmers keep track of their livestock.

The new technology, which takes the form of a smart ear tag, produces similar data to that delivered by consumer smart watches.

Using the device farmers can track where their herds graze, if an animal has escaped or been stolen, and even unusual movements which could indicate an animal is giving birth or sick.

The smart ear tag was successfully trialled on 100 cattle at CSIRO’s Lansdown Research Station near Townsville, Queensland, last week.

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The aim is to save farmers time and money compared to the costs of manually tracking their herds using vehicles or aircraft.

David Smith, CEO of Ceres Tag, said Ceres Tag gives greater transparency over grazing management, allowing farmers to locate and monitor their animals to reduce risk and operating costs, improve efficiency and assist with traceability.

“The tag is GPS-enabled, allowing farmers to track the location of individual animals remotely, via Internet of Things (IoT) capability,” he said.

Using on-board accelerometers, the tag can send out alerts for unusual activity patterns which could be triggered by events like theft and other disturbances of the herd.

CSIRO group leader Ed Charmley said Australian farmers need every bit of help they can get right now.

“We are pleased it has taken less than a year for this technology to move from the research phase into development for a real-world trial on cattle.

“Our focus for future iterations is to create a smaller and lighter tag, as well as added functionality such as a temperature sensor, which could alert farmers to illnesses at an earlier stage,” said Charmley.

Ceres Tag will be on show at the digital forum at MLA’s Red Meat 2018 event in Canberra on November 22 – 23 and the Global Forum for Innovations in Agriculture in Brisbane the following week.

The tags aspire to be the world’s first smart ear tag accredited for provenance to international traceability standards, including Australia’s National Livestock Identification System (NLIS).

They are designed for improved retention and to last throughout the life of the animal in Australia’s unique and often harsh conditions.

CSIRO and Ceres Tag will release further iterations of the smart ear tag, drawing on CSIRO’s deep livestock knowledge and the sensing and data analytics expertise of its technology arm, Data61.

The development of the smart ear tag was co-funded by MLA Donor Company.