Global beef demand masks volatility of skyrocketing cattle prices

Global beef demand masks volatility of skyrocketing cattle prices

Beef
ON-THE-GROUND VIEW: JBS Australia's commercial manager northern Brendan Tatt and feedlot and farm manager Sean Sturgess.

ON-THE-GROUND VIEW: JBS Australia's commercial manager northern Brendan Tatt and feedlot and farm manager Sean Sturgess.

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Many of our customers don't have options at the moment but that won't always be the case

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THE shortage of cattle worldwide at a time when demand for beef is going from strength to strength is placing Australia's cattle business in a very attractive position.

However, some of the phenomenal demand dynamics at play right now are perhaps masking the extreme volatility posed by Australia's skyrocketing cattle market.

This is how one of the country's most experienced beef sellers, JBS Australia's commercial manager northern Brendan Tatt, sees things.

Mr Tatt gave an on-the-ground perspective of how Australian beef is travelling on the global stage at the presentation of the weight gain section of the Royal Queensland Show's Paddock to Palate competition this week.

Presented by JBS, the competition is the nation's richest of it's kind and now moves onto the carcase judging and eating quality phase.

Mr Tatt said COVID was still impacting massive numbers of people around the world and many were very good customers of Australian beef.

"We've had the most difficult negotiations on grain-fed beef with Japan since the GFC (global financial crisis)," he said.

"Believe me, they are looking for options (given Australia's high prices).

"The implications of our massive price rise in cattle is something we need to be considering."

Cattle prices in both the United States and Brazil were 65pc cheaper than in Australia right now, Mr Tatt said.

"There is not enough beef to go around at the moment and demand in most markets is growing," he said.

"Governments are drilling money straight out into pockets. People have high levels of discretionary income.

"Typically, at these times people spend on high marbled beef. Wagyu is in a super cycle.

"Not everyone can afford to pay $100 for a steak but there are more paying it at the moment than normal."

At the same time, and for varied reasons, supply was short and many of Australian beef's customers don't have options.

"The US is on fire domestically and riding beef prices we've never before seen and while that will probably continue for a while, it's very much masking the situation for us," Mr Tatt said.

What's going to happen when that demand eases and the US has mountains of beef to shift to export markets, given the price disadvantage Australia is in?

"We need to be alert but not alarmed," Mr Tatt said.

UK potential

While the US was moving heavily into the China market, providing strong competition for Australian beef, in other parts of the world things were developing that could well offset that, Mr Tatt felt.

"We've just struck what looks, on paper, like a great trade deal with the United Kingdom. It's much more than many in the industry thought would be achieved," he said.

"The detail is still to come but if it starts at 40,000t, which has been published so far, that's ten times the amount of quota we have now with no tariff and that's huge."

By as early as next year, Australian beef could be capitalising.

"It will be a HGP (hormone growth promotant) free market. China originally made HGP-free exciting for us," Mr Tatt said.

"If the UK comes in to this extent, they have ability to buy a lot of our meat that was going to China."

Mr Tatt said there would no doubt be a lot of twists in the beef exporting road ahead but 'at the end of the day, we have a product people want.'

"Apart from toilet paper, it's the most demanded thing in the supermarket on any given day," he said.

"That's a really nice place for us to be but it is volatile."

HIGH PERFORMERS: A pen rider does the rounds at JBS's Beef City feedlot near Toowoomba.

HIGH PERFORMERS: A pen rider does the rounds at JBS's Beef City feedlot near Toowoomba.

All the cattle in the Paddock to Palate weight gain competition, apart from the Wagyus, were fed at JBS's Beef City, west of Toowoomba, one of two fully-integrated farm, feedlot, processing facility and livestock transport operations in the country.

For close to 50 years, the feedlot, which has a capacity of 26,500 head, has been supplying the adjoining processing facility.

JBS feedlot and farm manager Sean Sturgess said the plant processes 1000 head a day, five days a week.

The feedlot has 50 employees, the plant 750 and the transport operation 16 drivers.

Overall, the 574 head in the competition fed at Beef City consumed 804,230 kilograms of feed to gain 114,060 kilograms of beef, Mr Sturgess reported.

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