1) The document summarizes projections for the Australian cattle market in 2016, noting that cattle supplies will bottom out in 2017 and production will recover more quickly than in past droughts. Exports will continue to stretch domestic product availability.
2) Cattle prices are expected to remain firm in 2016 as tight cattle turnoff shrinks the discount to US prices. Store cattle are predicted to outperform finished lines.
3) While trends are clear, the speed of changes in production and their market impacts remain uncertain, such as how high prices may rise and how quickly herd rebuilding can occur.
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Cattle Market Outlook - 1st February 2016
1. What to look out for in 2016 for cattle markets?
1 February 2016
Presented by:
Ben Thomas, MLA & Robert Herrmann, Mecardo
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1. Dial 1800 896 323 on your phone
2. Enter participant code = 24584740
2. Some housekeeping
ยป 15 minutes Q&A at the end
ยป Use Chat Box (bottom left, near cog) to
lodge a question anytime during webinar
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3. Before we start
ยป Presentation is content rich โ Charts and Figures.
ยป Charts will be used to show trends and tell a story โ donโt get
too caught up on the details.
ยป Outlook remains bullish for cattle markets, albeit not as
strong as in 2015.
ยป Focus on the US cattle cycle and its impact upon local prices
ยป Shrinking local discount to US prices due to tightening cattle
turnoff
ยป Herd rebuild phase to support store cattle prices to see them
outperform finished lines
ยป Relevant information for strategic long-term decision making.
5. We know the trend, butโฆ
How low will beef supplies go?
When exactly will that be?
How high will cattle prices go? Or have we already hit the
peak?
What markets will be least / most affected?
6. Slaughter declined in 2015 โ even with dry
0
20
40
60
80
100
120
140
160
180
200
โ000head
weekly slaughter 10 week rolling average
15. Conclusions
โข Australian cattle supplies will bottom out in 2017
โข Production will recover quicker than in previous drought recoveries
โข Exports continue to stretch product on the domestic market
โข Prolonged period of lower year-on-year quarterly production
While the likely trends are clear, the speed of change and market
impacts are less so
โข How high are cattle prices going?
โข How quickly can the herd and production be turned around?
โข Which markets are likely to react more to the lower product availability and higher
prices?
16. About MLA
Meat and Livestock Australia Ltd (MLA) strives to be the
recognised leader in research, development and
marketing.
MLA delivers value to levy payers by investing in
initiatives that contribute to:
โข Producer profitability
โข Sustainability
โข Global competitiveness
MLA is a producer owned, not-for-profit organisation
and not an industry representative body.
18. Disclaimer
To the best of MLAโs knowledge the information contained in the publication
accurately depicts existing and likely future market demand. However, forecasts and
projections are imprecise and subject to a high degree of uncertainty.
MLA makes no representations and to the extent permitted by law excludes all
warranties in relation to the information contained in this publication. MLA is not liable
to you or to any third party for any losses, costs or expenses, including any direct,
indirect, incidental, consequential, special or exemplary damages or lost profit,
resulting from any use or misuse of the information contained in this publication.
19. US Cattle Cycle and US Cattle Prices
ยป Cattle supply
and prices are
cyclical
ยป 8 major cycles
over the last
100 years
ยป Expansion
phase 3-8 years
ยป Liquidation
phase 2-5 years
20. US Cattle cycle influence on Australian prices
ยป Similar cycles in
Australia but
impact on price
is subdued
ยป Australian
market is
โexport-centricโ
ยป Domestic cattle
prices should
follow US cattle
and beef
markets
21. Australian cattle cycle and US influence
ยป Strong price
correlation
between US and
Australia
ยป During 2013-14
domestic market
deviated
ยป 2016 season
signals a return
to โnormalโ
25. Take home messages
ยป MLA and USDA projections are the backbone for our
price outlook
ยป Cattle markets present distinct long-term structural
supply cycles, which in turn, determine price cycles.
ยป Tightening cattle turnoff in 2016 will continue to see
discounts to US prices shrinking to underpin firm
domestic cattle prices.
ยป The EYCI, and store cattle in general, will outperform
finished lines in 2016.
ยป Cattle producers should enjoy favourable margins,
particularly breeding operators.
26. More information
ยป Matt Dalgleish โ Market Analyst
โ matt@agconcepts.com.au
ยป More info โ Andrew Whitelaw:
โ andrew@mecardo.com.au, 0457 054 169
ยป Non-Mecardo subscribers will receive one
month of Mecardo Premium for free
