Saleyard indicators improved across the board this week, with restockers driving demand. The Eastern Young Cattle Indicator (EYCI) improved 5.8% week on week to 748¢/kg cwt. Per MLA saleyard reports, southern processors continue to pursue northern cattle, and numbers have been ticking slightly higher in Queensland over the last fortnight after a dry start to winter has some making a move on stocking rates.
A proposed 50% tariff on Brazilian exports into the US is the latest Trump tariff, which has thrown a spanner in the works for global trade. Brazilian beef to the US has a quota limit of approximately 65K tonnes (which has well and truly been passed with year-to-date beef trade between them having exceeded 300K tonnes per Steiner), a 108% YoY increase. US beef importers were already paying a 36% import tariff on the above quota volumes before the announcement.
Now there’s still plenty that can happen before this comes into fruition (trade negotiations, legal challenges, 90-day delays, revisions to goods charges, etc), but the prospect of US importers having to wear a tariff rate that could potentially exceed 70% on Brazilian beef is daunting for US buyers but potentially bullish for Aussie exporters.
Australia has managed to keep its nose clean at 10% for now. A further increase in the Australian tariff rate, in addition to a potential Brazilian tariff lift, would put significant price pressure on US importers. 90CL pricing averaged 319 US c/lb last week (a new record in US c/lb terms), so there is already movement at the station on pricing before the Brazil tariff announcement.
Closer to home, on Mecardo this week, Jamie-Lee Oldfield had a look at the difference in supply between the North and South with a look ahead to the rest of the year (read more here). The supply outlook for the rest of the year looks to continue on its current trajectory, with Queensland stock likely to get to the finish on farm and therefore going directly to feeders and the processors. NSW and Victorian yardings are above average and could increase again if meaningful rainfall evades the south between now and spring.
Brazilian beef tariffs bullish for Aussie beef?
Next week
More rain is the last part of the formula for an uphill run-in saleyard cattle pricing. Slaughter remains upbeat, and yardings have remained consistent so far throughout winter.
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Click on graph to expand
Click on graph to expand
Data sources: Steiner, Mecardo; Meat and Livestock Australia
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