Aussie and US cattle prices closest since 2012

Australian and US cattle prices typically follow a similar pattern, due largely to the heavy influence the US beef industry has on global markets and the importance of the US for Australian exports. Figure 1 illustrates Australian and US heavy steer prices, in A¢/kg lwt.

Up until the beginning of 2013, the average difference between Australian heavy steers and US Choice fed steers was 73A¢/kg lwt. This margin stretched to 187¢/kg lwt in 2014, as Australian cattle prices remained relatively flat, while at the same time the US market increased extraordinarily as a result of very tight availability.

In 2015, the average price difference for the year-to-date (including the rapid falls of the past two weeks in the US) is in fact only slightly less than last year, at 180A¢/kg lwt. While the number of cattle offered on the Australian market has not reduced significantly this year, working in Australia’s favour has been the depreciation of the A$ – assisting the competitiveness of Australian beef globally.

The decline in Australian cattle prices last week was not nearly as dramatic as that in the US and the difference between the two countries dropped to 68A¢/kg lwt – virtually back in line with the pre-2014 average and the closest the two markets have been since August 2012.

After the huge (57A¢/kg lwt) fall in US Choice Fed steer prices over the past two weeks, market conditions this week are slightly more stable, with some US indicators steady or increasing slightly. The longer term outlook for the Australian beef industry remains positive, especially considering the looming tight beef availability and eventual widespread igniting of restockers.