After all the talk and conjecture regarding the US tariffs on imports, we have seen very little in the way of price volatility on export beef values to the US or in local markets. Later this week, we get export data for April, which will tell a story; until then, we’ll look at slaughter and price.
If beef exporters are worried about tariffs and economic uncertainty, they are not showing it. Before the declines caused by three public holidays in two weeks, eastern states cattle slaughter reached a new six-year high.
Figure 1 shows eastern states cattle slaughter peaking at 149,571 head in the second week of April, and averaging rates 14% higher than the same time last year. A dip in Queensland slaughter rates, thanks to the floods, has been negated by jumps in rates in NSW and Victoria. The last time the east coast slaughter was above 150,000 head was back in December 2019.
Figure 2 shows we are still some way off the slaughter peaks seen in 2015 when drought drove cows to the market. Increasing slaughter capacity is good for markets, as the higher it is, the more producers will be able to realise some of the benefits of very strong global beef markets.
Figure 3 shows how tariff issues haven’t impacted export beef pricing as yet. The jump in the 90CL in late March might have been driven by importers trying to beat the tariff deadline, and it was sustained in our terms by a much weaker Aussie dollar.
It’s hard to see on the chart, but the recent rise in our exchange rate and easing of export beef prices in US terms have likely brought the 90CL value back to where it was in early March. Still a very healthy 1100¢/kg swt. This is 17% better than the same time last year.
The Eastern Young Cattle Indicator (EYCI) is also stronger than this time last year, in the order of 13%. It is encouraging for producers to see that despite stronger slaughter rates and beef supply, cattle prices have risen over the last twelve months.
What does it mean?
Strong export markets and rain in the north will continue to support cattle prices. However, we have been saying for a while that the herd is strong, and processors have no need to lift rates to secure cattle. The tariff saga seems to have washed through the market with little impact thus far.
Key Points
- Weekly cattle slaughter hit a six-year high earlier in April.
- Export beef prices remain strong, with cattle prices finding support.
- Tariff announcements appear to have little impact on cattle markets thus far.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, Steiner, Mecardo
