Australian cattle prices remain at historically high levels, continuing to be driven by strong restocker demand for record low numbers of available stock. Rainfall events in late summer and autumn have resulted in increased confidence of producers leading into winter, with restockers paying more than a 10% premium for cattle over prices offered by feeders and meat processors.
The EYCI has traded in a range of 610 to 670 c/kg cwt during the first 6 months of the year, and average seasonal conditions for the remainder of the year should provide continued confidence to producers.
Within the past month, a significant event within the global market for beef has been the entry of US beef into China after a ban spanning some 14 years due to BSE. China is currently Australia’s fourth-largest beef export market and represents a significant and important destination for high-value Australian meat cuts. The entry of US beef (whilst currently priced at a premium) is an important milestone for US meat packers and a significant opportunity for their high-quality grain-fed product.
The market entry requirements for US packers include chilled or frozen bone-in and boneless beef, and whilst not overly onerous, will add costs and procedures to the US beef supply chain. These requirements include lifetime traceability (similar to Australia’s NLIS); age of less than 30 months; product must have a unique identifier fully traceable within the supply chain; and includes a ban on growth promotants, feed additives and other chemical compounds (a large proportion of which are actively utilised within the US feedlot supply chain).
The inclusion of whole of life traceability; combined with the negative performance response of removing growth promotants and other compounds from feedlots; and costs associated with residue testing for these compounds, is expected to add substantial costs to the US supply chain with commentators noting that US beef producers and feeders would require a tangible pricing incentive in order to align their production practices with these requirements.
The impact to Australian exporters and beef producers to the entry of the US into the China market is expected to be negligible in the short term, and it is anticipated that the US supply chain will take some time to establish testing protocols and traceability procedures in order to meet entry requirements. The importance of the re-establishment of US access to China, however, should not be understated and as Australia’s fourth largest export destination, the industry should remain vigilant in order to protect Australia’s position within the market.