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  • Rikki Lambert

Australian beef industry at the crossroads: Rabobank

Historically low Australian cattle inventories should prompt the beef industry to ponder its position in supply chains and potentially readjust, one bank says.

Low cattle supplies, higher prices, an appreciating Australian dollar and trade tensions with China continue to create headwinds for the national beef industry, an agribusiness banking specialist says.

But the steady recovery of breeding cattle numbers places the industry in a "unique position" to assess its current trajectory and correct course.

Rabobank's beef seasonal outlook found Australia's 30-year low for breeding cattle inventories was gradually correcting itself.

However limited cattle supplies would remain a problem for the industry in 2021, supporting prices but also complicating restocking and fattening and forcing plants and feedlots to operate below capacity.

Smaller herds would also limit Australian cattle slaughter.

Slaughter rates are expected to fall six per cent in 2021 compared to 2020, while beef exports and overall beef production will drop five per cent.

Rabobank senior animal proteins analyst and report author Angus Gidley-Baird said Australia should take the opportunity to ponder its position in the global beef supply chain.

He said the Australian beef industry could take multiple paths, from being a supplier into high-quality niche markets to a lean beef commodity supplier, major live cattle exporter or value-added beef exporter.

Mr Gidley-Baird said in a statement on Tuesday:

"Decisions taken this year are not just about whether to restock at high prices..
"(They're) also about which genetics, productions system attributes, feeding regimes, supply chains and end customers are needed to build a sustainable basis for the business in the future."

The conclusion of drought had also in 2020 prompted a six per cent rise in the average weight of cattle carcasses to 305 kilograms, Rabobank found.

Mr Gidley-Baird said the high prices for cattle would slowly decline throughout 2021, falling to about $7 per kilogram by the end of the year.

The domestic market is expected to account for almost 30 per cent of Australian beef production in 2021, and export volumes to China are likely to decline faster than exports to Japan, South Korea or the United States.

China has targeted Australian beef, barley, coal, copper, cotton, seafood, sugar, timber and wine in its trade sanctions on Australian goods in the past 12 months.

In 2020, at least six Australian beef suppliers were blocked from exporting into China.

-- with AAP


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