Australian beef recovery underway, but unlikely to reach full potential, Rabobank
via Beef Central (Australia) - 06/05/2022
AUSTRALIA’S cattle availability will increase this year as the national herd continues to rebuild, but supply chain limitations will impede sector growth, according to agribusiness banking specialist Rabobank.
The bank this week put out its Australian Beef Seasonal Outlook for 2022 which predicted that supply chain issues will continue to burden the industry.
In the report, titled ‘Recovery well underway but the process will be slow’, Rabobank says as cattle numbers start to lift, they will create additional pressures in the already-constrained supply chain and have implications for sales and prices.
“Increased cattle numbers will see some of the urgency leave the cattle-buying market, so prices will drift down. But domestic consumption and export markets are favourable, and we don’t believe there will be any rapid price drops,” the report says.
“As cattle numbers increase, buyers will become more discerning. If people are going to continue to pay high prices, they will choose the better-quality cattle.”
Report author and Rabobank senior animal proteins analyst Angus Gidley-Baird said he expected heavier discounting for “poorer cattle and those that don’t meet specifications”.
“Additional cattle will also load up the supply chain. And existing constraints like freight costs, container access, port congestion and labour availability at processing plants will come under further pressure,” he said.
“These constraints will limit the ability to expand capacity to meet the increase in cattle numbers and may lead to some delays in processing cattle and to additional downward pressure on prices.”
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