Beefed up 2018 competition

Beefed up 2018 competition


Beef Cattle
The surge in Chinese demand will be a key influence on the fortunes for Australian beef producers next year but just what role our competitors will play is unknown.

The surge in Chinese demand will be a key influence on the fortunes for Australian beef producers next year but just what role our competitors will play is unknown.

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MORE competition will be the name of the game for Australian beef exports in 2018 but that could present as many advantages as it does challenges.

Not only beef but global meat production is forecast to grow, so there will be intensified trade competition from other beef-producing nations along with different types of animal proteins vying strongly for beef’s space on retail shelves.

Many analysts, however, are arguing the extra supply is timely, coinciding with ongoing growth in demand fueled by everything from rising incomes in Asia to the fact increases in the relative price of beef has now plateaued.

Competitive tension among our key importers as they look to secure volumes knowing how tight cattle supply in Australia is could well balance out the downward pressure on prices due to greater global production.

Rabobank expects animal protein production increases in all major regions, with the total growth once again surpassing the 10-year average. Global beef production is pegged to increase by 1.3 million tonnes in 2018.

Brazil, China and the United States will be the main drivers.

Rabobank’s Angus Gidley-Baird said a forecast three per cent growth in beef production in Australia in 2018 would put total production levels up near the longer-term average of 2.1m tonnes carcass weight.

Tobin Gorey, Commonwealth Bank, said US production growth was a key one for Australia to watch.

Next year will be the fourth in a row US beef production has expanded at a rate of 4pc a year.

While domestic consumption in the US has also grown, most analysts believe the point has now been reached where demand growth is no longer keeping pace with increased supply. That means increased product is pushed into global markets and the US has its eye on our customers, such as Korea, Japan and China.

The latest ANZ commodity report says despite Australia’s expected growth in beef production next year, the outlook for exports is will be restricted to about 1pc, due to the re-entry of the US in key markets and the pressure of the US herd rebuild on our exports there.

Meanwhile, the surge in Chinese demand will be another key influence, said Matt Dalgleish, from market analysts Mecardo.

“As our production begins to increase and prices ease gradually, it will continue to encourage Chinese appetite for our product,” he said.

The prospect of the Australian dollar slipping below US70 cents would also help bolster returns for Australian beef producers exporting to China, he said.

Rabobank predicts Chinese beef imports will increase 20pc to 800,000 tonnes in 2018.

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