Cattle prices seen rising
WAFarmers president Dale Park believes big cattle price rises are inevitable as supply shrinks and overseas demand soars.
Mr Park is boosting cattle production and shifting resources away from growing wool on his Badgingarra farm in expectation of better returns.
"We haven't seen big price rises yet but what the impact of the drought in eastern Australia has done is make it almost a certainty," he said.
Meat and Livestock Australia forecasts released yesterday show prices could soon jump 40 per cent on averages for the first half of this year. MLA predicts the Australian cattle herd will fall to 26.1 million head by June next year, its lowest level in almost two decades.
Live cattle shipments are at near-record levels and beef and veal exports are expected to reach the peak of 1.1 million tonnes achieved in 2013.
Strong overseas demand is likely to start stripping beef from the domestic market in the final few months of this year.
Mr Park said sharp price rises would focus attention on efforts to boost supply in WA where there were about 1.9 million beef cattle.
"Irrigation projects will definitely happen in the north and down here - depending on grain prices - feed lotting becomes a real possibility," he said.
"In WA, we have only really used feedlots for topping up and it will take quite a change but it could be about to happen."
Mr Park said prices had started to improve over the past 12 months and were up to $2.60/kg for store cattle.
Australia is on target to slaughter about 16.6 million head in the 24 months to the end of 2014 as a result of the severe drought in key cattle-producing regions in Queensland and NSW.
Underpinned by strong demand from Indonesia and Vietnam, live exports are tipped to reach 1.13 million head.
MLA market analyst Tim McRae said the high slaughter rates of the past 18 months would have a big impact on the number of cattle available for processing or live export in coming years.
"With the inevitable tightening of supply, prices for Australian cattle are forecast to increase into next year, bringing them back in line with global cattle and beef prices," he said.
"The limiting factor in a price turnaround for the Australian market will be seasonal conditions for the remainder of 2014 and the northern 2014-15 wet season, which will be key to watch."