Australian beef outperforms on the world trade stage
There have been varying trends in other producing nations countries, however the premium for Australian cattle has been preserved despite the declines in price.
Using data from MLA’s National Livestock Reporting Service (NLRS) and the US Department of Agriculture (USDA) to replicate the Brazilian Boi Gordo Heavy Steer Indicator, it’s clear that this shift – as well as cattle prices across major beef-trading nations generally – have been moving with local weather patterns and the broader economic environment.
From a local peak in October 2022, Australian heavy steer prices have fallen 22% to US418¢/kg carcase weight (cwt). This reflects the fall in price of Australian cattle, but also a slight decline in the Australian dollar which has kept Australian prices competitive in the global market and, to some extent, protected prices from global conditions.
Brazilian heavy steer prices have been falling in US dollar terms since April 2022, with the fall in price broadly matching the decline in Australian heavy steer prices.
This means that Australian cattle are retaining a premium over Brazilian cattle in real terms, reflecting the higher demand for Australian beef and the increasing premiumisation of Australian beef on the international market.
In early November 2022, heavy steer prices in the USA overtook Australian prices and have continued a steep rise since. This has opened a US148¢/kg cwt gap as American supply shrinks and Australian supply expands.
Since 2015, Australian cattle prices have been trading at a premium to South American prices and have been more comparable to US prices. Despite recent price declines, the premium Australian cattle hold over their Brazilian equivalents has been retained, suggesting that the efforts of Australian producers and processors to ensure a global market advantage for a reliable premium for Australian cattle has been successful.
This bodes well for Australian beef for the next several years, as it suggests that as supply continues to grow, prices have a higher floor than in previous high-production periods.
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