Demand for WA beef strengthens

Demand for WA beef strengthens


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Competition from buyers was mixed at sales throughout the year, depending on the seasonal conditions at the time and market requirements, but towards the end of the year demand strengthened and became more consistent, especially for store type cattle which took some big hits during the year.

By JODIE RINTOUL and COURTNEY WALSH

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STEADY as she goes is the motto of stock agents at the moment if you ask them what’s going to happen in the WA cattle industry this year.

The market held relatively steady in WA in 2018 following price corrections in 2017 from the unprecedented highs of the previous season.

Competition from buyers was mixed at sales throughout the year, depending on the seasonal conditions at the time and market requirements, but towards the end of the year demand strengthened and became more consistent, especially for store type cattle which took some big hits during the year.

Prices in weaner sales this season have also seen strengthening demand in patches on the back of live export, lotfeeding and grazier buying support and as a result producers have seen increased returns for their calves compared to last year.

Elders South West livestock manager Michael Carroll said this weaner selling period had seen a significant increase in numbers of feeder cattle offered.

“With the large amount of this category type cattle being sold through a lot of selling centres, the values have surprisingly held firm, especially taking into consideration the feed input costs associated with feeding them,” Mr Carroll said.

“There has been an increased number being offered through the trade and store sales of mostly unweaned calves which have been well supported by graziers and restockers.”

In the past couple of sales at Boyanup held by Elders and Landmark before, Christmas steers sold up to 340c/kg and $1247 while heifers topped at 322c/kg and $1109.

These solid returns saw the Landmark sale on December 12, average $1002 a head for 1744 calves sold - in the same week in 2017 Elders averaged $929 for a yarding of 1131 calves.

These strong weaner prices have continued into 2019 with sales hosted by Landmark at Boyanup and Mt Barker last week remaining solid.

In the Boyanup sale where 1575 weaned calves were yarded, steers sold between 260-352c/kg and topped at $1212 while heifers sold from 230-312c/kg with a top of $1097.

In weaner sales this season buyers have definitely showed a preference for weaned calves and have been prepared to a pay a premium.

Landmark WA livestock manager Leon Giglia reflected on where the WA cattle market was at.

“Investing in the cattle industry has paid off for many Western Australian producers and going into 2019 we’ve seen our markets really consolidate,” Mr Giglia said.

“Over the past three years we have seen positive prices for cattle but I think into 2019 the market fluctuations we have seen in recent times have calmed down and we’re looking at slow and steady growth going forward.

“Enquiry for red meat, both in a box or on a boat, is strong and that’s a good news story for WA beef producers who have invested in quality genetics.”

On the back of strong demand for WA beef, Mr Giglia said producers could have confidence when investing in breeders.

“Those who have re-invested into breeding herds are seeing positive returns,” he said.

“With the amount of data available people are measuring like never before and with that they are seeing greater efficiencies, which leads to greater returns.”

Elders WA livestock sales manager Tom Marron agreed, saying he could not stress enough the value of investing in well-bred bulls and females.

“Investing in good genetics, whether it’s bulls or breeders, really pays off in the long run for the producer and it’s what sustains the market as well,” Mr Marron said.

“In the pastoral herds I think we’re starting to see more of a focus on that idea, like we have seen in the local market as well.

“We’ve seen evidence of that interest in well-bred cattle at breeder sales and weaner sales alike - quality is the ruler at the saleyards so investing in the right genetics is very important.”

Looking ahead, Mr Marron said he expected the local cattle market to see a bit of pressure on prices due to the flow-on effect of high grain prices.

“Generally in the local market though, I think it will be business as usual, tending on the cautious side,” Mr Marron said.

“In the pastoral cattle market there is uncertainty ahead with the upcoming Federal election and the discussion around live export we’ve been hearing from politicians,” Mr Marron said.

“It’s hard to know what will happen there but we expect that in some way, shape or form there will be changes to the industry in the future which will have an affect one way or the other.

“That said, there maybe some extra activity for WA pastoral producers in 2019 because of the drought in the Eastern States, with potential for more exports into South-East Asian countries like Vietnam, the Philippines and of course China.”

Latest Department of Primary Industries and Regional Development (DPIRD) beef statistics related to the WA herd show it remained steady numbering two million head as of July 2017 and the gross value of production (GVAP) for the WA cattle industry in 2016/17 was $833.1 million, accounting for 29pc of the value of all livestock industries in WA.

Most recent figures from DPIRD show 330,000 head of cattle were slaughtered in WA between January and October 2018 which was 9pc higher than for the same period in 2017.

On the back of these increased slaughter numbers DPIRD research officer Kate Pritchett reports WA beef exports for the same period last year reached 35.7 million kilogram carcase equivalents (CEQ) which was up 25pc year-on-year and the value of exports jumped 26pc year-on-year during this time and reached $155.8 million.

Ms Pritchett said the largest market for WA beef between January and October 2018 was Japan which had accounted for 18pc (6.3mkg) of exports, followed by China with 17pc and Indonesia with 14pc.

“There was strong growth in beef exports to both Indonesia and Malaysia during 2018,” Ms Pritchett said. 

“In 2017 (full year) WA exported 3.5mkg to Indonesia, however in the first 10 months of 2018 exports had already reached 5.0mkg. 

“Similarly for Malaysia, WA’s fifth largest market, in 2017 (full year) WA exported 2.7mkg and for the first 10 months of 2018 we exported 4.1mkg, which represents an increase of 54pc with two months still to go on the figures.” 

According to DPIRD’s beef statistics in value terms, the largest market for WA beef was China, which accounted for 21pc, with a value figure of $32.1m for between January and October 2018. 

Ms Pritchett said China’s figure for the first 10 months of 2018 had already surpassed its entire value of $32m achieved in 2017. 

Japan accounted for 17pc of the value of exports and the United States 13pc for the same period.

In terms of live export Ms Pritchett said the WA industry had also seen an increase year-on-year for the first 10 months of the year.

“WA live cattle exports (non-breeding) increased 3pc from 189,000 head in 2017 (January to October) to 194,000 head in 2018,” Ms Pritchett said.

“In value terms they have increased from $225.5m to $233.3m and WA accounted for 23pc of the number of cattle exported nationally from January to October in 2018.” 

In volume and value terms Indonesia was WA’s largest market for live cattle during 2018. 

In the first 10 months of 2018 it accounted for 90,000 head of cattle (46pc of exports) and $96.6 million (41pc of the value). 

Indonesia was followed by Israel and Vietnam which accounted for 18pc and 15pc respectively of the quantity of cattle exported.

Ms Pritchett said China had recently entered the market for non-breeding live cattle exports and took 13,000 head in 2018 (January to October), making them the fifth largest market in volume terms after only entering the market in December 2017.

In terms of the Australian beef industry as a whole, when it comes to exports, Meat & Livestock Australia’s (MLA) most recent monthly trade summary on Australian beef exports showed a total volume of 1,125,657 tonnes of shipping weight (SWT) was exported from Australia to more than 15 countries in the year to December.

This figure is up 11pc on 2016 and 2017 but still down on the 2014 peak where exports reached 1.28 million tonnes swt.

Japan again finished the year as Australia’s biggest export market for beef, despite ongoing competition from the US throughout the year, taking 315,891t swt.

This amount was up 8pc on 2017 and up 20pc on 2016’s figure. 

Australian beef remains a family favourite among Japanese consumers and has an established presence throughout food service and retail channels. 

The value of trade to Japan looks likely to exceed $2 billion, accounting for the largest year by value since 2005.

The United States was again the second biggest market for Australian beef exports in 2018 with it taking 231,187t swt, down 1pc on the previous year.

MLA reports robust demand from Asian markets – with importers paying a premium over US end users, diverted product away from the US market, in particular cuts that would have otherwise been destined for manufacturing beef. 

However, expanding US beef production has also been a limiting factor in Australian beef shipments to the market.

Also like 2017, South Korea and China rounded out the top four importers of Australian beef in the 2018 calendar year.

South Korea lifted its taking by 15pc to take 170,373t swt, while China following on from a 17pc increase in 2017, recorded an increase of 48pc in 2018 and imported 162,683t swt of Australian beef.

There were another three destinations for Australian beef exports which saw a double figure increase in the amount taken in 2018 compared to 2017.

These were Canada and Indonesia which had a 15pc increase while the Philippines recorded an 11pc jump.

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