WHETHER the 'confidence premium' that high world beef prices is injecting into the cattle market will prove stronger than the downward pressure of surging calf numbers is shaping up to be the great unknown for the 2022 saleyard outlook.
Forecasts from senior government economists released today back all other industry projections that cattle prices are indeed headed down but tend to paint a picture of the price fall being limited by exceptional global demand fundamentals.
The Australian Bureau of Agriculture Resource Economics has average saleyard prices this financial year at 789 cents a kilogram live weight, but falling to 711c in 2022/23.
ABARES' Jonathan Wong said high global beef prices had given graziers the confidence that they would profit from future sales, even when paying big money upfront.
He calls the difference between domestic cattle and world beef prices a 'confidence premium' and said it was the strength of that which had made Australian cattle amongst the most expensive in the world.
While the easing of restocking during the next financial year would remove much of the current confidence premium from prices, world demand for beef was expected to continue to rise, he reported.
Developing countries in particular will continue an upwards trend of beef consumption due to increased wage growth and urbanisation.
ABARES is forecasting beef exports to grow 11 per cent to $9.1 billion this financial year and maintain that level in 2022/23.
The fall in cattle prices will further serve to make Australian beef more competitive, and in greater demand.
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ANZ's cattle market experts also point to more growth in domestic and global demand for beef and say an additional factor in Australia's favour is that many major competitors are likely to experience supply challenges, such as herd decline and food safety concerns.
However, ANZ's latest Agri Commodity Report also highlights 2022 will feature one of the biggest calvings - and healthiest - in years, something that may impact the industry for years to come.
Many first calvers, now two or three years of age, are in excellent condition and likely to have easier births and deliver stronger calves, ANZ's Ian Hanrahan said.
When the first 2022 calves hit the saleyards later this year, the rapid rise in supply could deliver price relief for feedlotters and processors, he said.
"Given that some producers will be predicting this wave of calves onto the market, we may also see an early rush to sell before the surge, as is often the case with annual lamb sales," he said.
The implications further down the supply chain could be ramped up processor operating capacity and reduced retail price pressure on beef, according to ANZ.
Already, it looks like volatility is far more set into the 2022 cattle market story than in the previous two years.
The Eastern Young Cattle Indicator has been zig zagging since it took a massive two-day 80c/kg carcase weight fall at the start of February.
ANZ said that event highlighted the potential for some kind of correction to finally hit the market, having been predicted by many over the past two years but not eventuating.
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