EYCI bounces to 487.25c despite ongoing herd liquidation

EYCI rises despite ongoing surge in slaughter numbers and beef exports

Beef
CHINA BOUND: More Australian beef is winding up in Chinese supermarkets because of reduced supplies of local pork.

CHINA BOUND: More Australian beef is winding up in Chinese supermarkets because of reduced supplies of local pork.

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Asia is now taking 75 per cent of Australia's beef exports as China's pork crisis because of African swine flu worsens.

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The benchmark eastern young cattle indicator (EYCI) bounced up at the start of this week despite the ongoing liquidation of the national herd because of relentless drought.

The EYCI jumped eight cents on Tuesday to finish the day at 487.25c a liveweight on the back of useful rain in parts of south-east Australia.

Last week 159,0000 cattle were slaughtered in the eastern states, up two per cent on the previous week and six per cent on the same week last year.

Strong import demand from Asia, including China, is helping sustain Australian beef prices.

Australia's meat exports surged to 105,489 tonnes in May, up almost 7000t on April. Around 75pc of Australia's beef exports are now heading into Asia.

China is struggling with a worsening protein drought because of the devastation caused to its pig herd by African swine fever (ASF) with some observers estimating 200 million pigs will die or be culled this year.

ASF has now spread to North Korea, Vietnam and Cambodia.

China has also temporarily banned imports of beef from Brazil because of a case of BSE disease in a 17-year-old cow.

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.

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.

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.

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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