Why you’ll pay even more for steak
CONSUMERS face further increases in beef prices as ongoing drought decimates the national cattle herd.
New industry projections by Meat and Livestock Australia predict that the number of beef cattle in the country will hit the lowest level in more than two decades by the middle of this year.
Retail beef prices were the highest on record last year and with production falling, shoppers are expected to pay even more in future.
MLA market intelligence officer Scott Tolmie said the drought which gripped much of Queensland and New South Wales was responsible.
The dry conditions had undone much of the rebuilding of herds achieved since a 2013-15 drought.
Without more rain, the number nationally is expected to fall another 3.8 per cent to 26.2 million head this year - the lowest since the mid-1990s.
"A significant turnaround in conditions is needed before rebuilding can commence," he said. "The prospect of another below-average northern wet season and a largely negative three-month rainfall outlook will likely mean many producers that retained stock in 2018 will continue or commence destocking in the months ahead.
"Compared to last year, many producers have entered 2019 with depleted feed stockpiles and require a turnaround in seasonal conditions to avoid mounting fee costs."
The number of cattle slaughtered is predicted to drop 3 per cent to 7.6 million this year.
The MLA report says Australians are the biggest per capita beef consumers in the world and sales have remained steady over the past few years despite price rises.
Beef has increased 26 per cent since 2014, compared to 8 per cent for pork, while chicken has fallen 3 per cent.
The average beef price of $19.33 per kilo last year was the highest ever.
"Maintaining beef's per capita consumption will be a challenge as forecast supply constraints in coming years place further pressure on beef prices," the report says.
The industry outlook says weather will most likely have the strongest impact on domestic cattle prices, but exchange rates, US and South American production, access to export markets and Chinese demand will all play an important part.
The 1.13 million tonnes exported last year was the third largest on record.
Japan, the US and Korea are the biggest market but China was the fastest-growing - up 48 per cent.
Global demand for Australian beef remains largely positive.
A new round of beef tariff cuts in Japan, Korea and China should help, as should the exchange rate with the Aussie dollar tipped to remain below 75 US cents during this year.
But a trade war between the US and China, and fragile global financial markets could slow international demand.