Australia keeps trimming herd as China's beef appetite grows

Australia trims herd while China's appetite for beef trimmings grows


Beef News
CHINA DEMAND: Increasing demand for imported beef in China is helping ease Australia's heavy turn-off of cattle because of ongoing drought.

CHINA DEMAND: Increasing demand for imported beef in China is helping ease Australia's heavy turn-off of cattle because of ongoing drought.

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China remains the shining light for Australia's beef industry which is dealing with a relentless drought in many regions.

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Strong import demand from China is helping sustain Australian beef prices as the ongoing drought continues to prune national cattle numbers.

In its beef update for the second quarter of 2019, Rabobank said producers could expect price volatility during the coming six months as the market reacted to any significant falls of rain.

The benchmark eastern young cattle indicator (EYCI) has been stuck in a rut during recent weeks and is now hovering around 471 cents a kg carcase weight.

Rabobank analysts, Angus Gidley-Baird, said the EYCI could ease a little toward the $4 mark in the absence of widespread rain.

The national beef herd has declined to 25.2 head, the lowest level for 20 years while slaughter was up 14pc in the first three months of the year compared with the same period in 2018.

The proportion of females in the total cattle slaughter reached 58pc in March, the highest figure in more than 40 years.

Mr Gidley-Baird said beef exports for the first four months of the year were up 12pc with shipments to the US, China and South Korea up by 15pc, 66pc and 33pc respectively.

PRICE VOLATILITY: Rabobank's Angus Gidley-Baird predicts volatility in the benchmark eastern young cattle indicator (EYCI) in the next six months if worrying predictions for a lack of rain in winter come true.

PRICE VOLATILITY: Rabobank's Angus Gidley-Baird predicts volatility in the benchmark eastern young cattle indicator (EYCI) in the next six months if worrying predictions for a lack of rain in winter come true.

He said Chinese retail beef prices had remained strong for the first five months of 2019 which is good news for Australian producers.

Rabobank believed Chinese beef prices would remain strong, supported by higher pig prices and increased beef consumption.

Pork prices were expected to increase substantially in the second half of 2019 as a result of reduced pork supply following pig culling due to African swine fever (ASF) across China.

Mr Gidley-Baird said some consumers were concerned about ASF which would lift demand for beef.

"We expect these conditions to prevail through 2019 and into 2020, continuing to support strong beef prices," he said.

FAST FOOD BOOM: A growing appetite among Chinese consumers for western-style foods has the likes of McDonald's and Burger King licking their lips.

FAST FOOD BOOM: A growing appetite among Chinese consumers for western-style foods has the likes of McDonald's and Burger King licking their lips.

China's domestic beef production was showing no signs of significantly boosting output to help cover pork shortfalls.

In the first quarter of 2019 China's official beef imports continued strong growth, up 47pc year-on-year, reaching 311,000 tonnes.

Rabobank said growing demand for western-style beef consumption in Asian countries may also knock the US off its perch as the leading global market for beef trimmings.

It said in 2018 McDonald's opened more than 300 stores in China, taking its total store numbers to 2800 with plans to lift that number to 4500 in China and Hong Kong.

Burger King has also seen strong store number increases since 2012, taking numbers from 52 to more than 900 at the end of 2018.

Australian exports of manufacturing beef (trimmings) to the three markets of Japan, South Korea, and China combined have been steadily growing for the past four years.

Meanwhile, China's ongoing struggle to control an epidemic of deadly ASF is continuing with some analysts predicting 200 million pigs will die or be culled this year.

The World Organisation for Animal Health (OIE) said China would have to deal with the disease for many years to come.

Beijing has said its breeding herd is 22pc smaller than this time last year but some industry observers believe the impact could be much greater.

ASF has spread to Vietnam, Cambodia and North Korea and the OIE has now launched a global initiative with the United Nations Food and Agriculture Organisation to try to keep the disease in check.

"The objective is to control the disease, strengthen countries' prevention and preparation efforts, and minimize the adverse effects on animal health, animal welfare and international trade," the OIE said in a statement.

The disease has no cure but China is working on the development of a vaccine.

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