THE scales of upward and downward pressure on cattle prices still appear to be weighted in favour of the types of returns that have underpinned a record average farm income for specialist beef producers this financial year.
Just-released Australian Bureau of Agricultural and Resource Economics and Sciences figures showing a $204,000 average income represents the highest in real terms for at least 20 years, which is as far back as the data has been collected, according to Meat and Livestock Australia’s head markets analyst Ben Thomas.
Likely, they were the best ever, he said.
The 2016-17 incomes were a 12 per cent rise from 2015/16, which itself was up 48pc from the previous year.
Speaking at the Angus National Conference in Ballarat, Mr Thomas said those figures sum up what has been a phenomenal couple of years for the beef industry.
And he said while a correction in prices was inevitable, MLA analysis was indicating a settle point in the vicinity of 250 to 300 cents per kilogram liveweight.
So far this year the Eastern Young Cattle Indicator had averaged 100c/kg carcase weight above where it was last year - and those 2016 prices themselves were records, he said.
Most of the expectations for the cattle market were playing out but while the likely trends were clear, the speed of change and market impacts less so, Mr Thomas said. He outlined a number of positives that would continue to support upward pressure on cattle prices, saying the big driver is the supply situation.
“It’s such an influential part of the equation,” he said.
“The record turnoff of 2014 and 15 has had a huge impact - 10.5m head left the system in each of those years.
“Our expectations are for there to be only 7.1m head killed this year.
“There have only been a few times in history when the cattle slaughter has dropped that low.”
Competition for that smaller pool of supply would go along way to supporting the cattle market for the duration of the year, he said.
Competitors in our international markets was another challenge.