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Processors Set to Cash in on Super Demand in Beef Cycle

16 January 2018

AUSTRALIA - Meat processors are set to cash in on favourable world market conditions in the coming year, according to a beef industry analyst.

According to ABC Online, Simon Quilty has updated his outlook for a beef 'super demand' cycle which he said was a period where price and demand both lifted exponentially and believed 2018 would be "the year of the processor".

"Processors have had a pretty tough two years but I think the benefits of (current) global markets are for the processor to be had."

However Mr Quilty warned that even though abattoirs and meat processors would be making money, it looked like prices would fall for beef farmers in 2018.

"I see cattle prices in Australia, being difficult. It's a struggling year."

Price rise already predicted
Meat futures markets are already showing that price rises are coming later this year.

Prices for some types of beef (e.g domestic fresh 90s) in the United States of America are showing an 8 per cent premium in price for the second half of this year.

"In pork, it's even more dramatic, where the market is predicting a 20 per cent to 25 per cent increase," Mr Quitly said.

"They're bullish markets indicating some upside in the market."

Super demand in full flight

For the past year, Simon Quilty has published a number of papers on what he calls a super demand cycle.

Where production increases and prices increases happen at the same time due to a period of 'super demand.'

The United States is a standout with 17-year low unemployment, high growth and government tax cuts.

As for prices, Mr Quilty believes this will be good for meat processors in 2018 and for farmers in 2019.

"I think in my opinion this year is the year of the processor."

"I still am of the opinion that cattle prices in Australia will meet some heavy headwinds this year."

"Part of that is that there is a cattle cycle and there is a global meat cycle and at the moment they're mutually exclusive but in 2019 they will come together."

Falling prices hit farmers at first sales of 2018

Annual weaner sales at Wodonga in northern Victoria have sold over 20,000 cattle in six sales in the first weeks of January 2018.

Ben Ratten the Regional Livestock Exchange Group, General Manager said even though prices had fallen most producers were reasonably happy.

"Prices are definitely back on the value per kilogram of where we were last year but the weight of the actual animal is up."

Farmer at Rutherglen, John Terrill sold 40, Hereford/Angus cross steers for a top of $1,125 and is happy with where prices are.

"I know we're not making as much as last year but it's still making not too bad of a money," he said.

TheCattleSite News Desk

Top image via Shutterstock



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