HAVING observed the Pakenham trade cattle sale on Monday, I was left wondering when the market will improve.
It was not so much the lack of price, but the difference in price ranges for different cattle.
If you follow Meat & Livestock Australia's (MLA) reports on overseas trends one could rightfully expect prices to be quite a bit higher.
US cattle prices continue to remain at high levels, which in theory should at least create stronger demand for our grinding beef.
In fact to some extent it has with the 90CL price improving 7.3 cents a kilogram shipped weight last week, which took it to 457c/kg.
This is way ahead of our cow price indicator, which in Stock & Land's regular indicator box last week, was 256c/kg carcase weight.
The increase in the 90CL price did take some tonnage off the spot market.
Why are we not seeing much benefit from the US grinding beef market?
The main reason is the extended drought in northern Australia, which is continuing the extraordinary slaughter of adult female cattle.
This scenario has been going for 22 months and while it is not unheard of, other years in 1972, 1974, 1989, 1997-98 and more recently 2006-07, evoke strong memories of poor prices.
Those previous years were oversupply here, coupled with oversupply overseas, but that is not the case this time.
Winter rainfall in the north will continue to be sparse, according to the Bureau of Meteorology, which only sustains the high female cattle slaughter.
When things do turn around, how strong will the changes be?
MLA predictions of strong demand for live cattle to South East Asia will see fewer cattle travel from north to south, and when this scenario collides with the potential herd re-building when the drought breaks, there should be a big drop in cattle slaughter.
The end result will be better prices.
To cap this off, exports to China are expected to at least be stable with a three per cent increase forecast, taking the tonnage to 166,000 tonnes.
I expect these predictions to be correct, and if anything understated as Chinese investors continue to purchase abattoirs around the country.
On top of the recent purchase of Tabro Meats by a Chinese consortium, Chinese investors have just last week announced their purchase of one of Western Australia's largest meat processing plants.
Our other significant red meat exports, that of lamb and mutton, have increased dramatically too.
Lamb meat exports rose 42pc to $381 million – a lift of $113m year-on-year with most of the larger percentage being created by strong demand from Asian countries.
What to look for in the near future!
Just last week the Victorian Government led a trade delegation to Malaysia, Singapore and Indonesia.
The State Government invited Local Government to participate and my shire (Baw Baw Shire) had the CEO, Helen Anstis and our director of growth and development, Matthew Cripps, join the delegation. Might I add, this was partly funded by the government.
In a meeting with Ms Anstis on Tuesday, she embellished the opportunities for producers from Gippsland.
While on this trade visit, she said they met with one operator who could seek the equivalent of ten 40-foot containers of lamb carcases a week, providing they were slaughtered halal.
Other opportunities arose, too, with another company wanting to have ongoing imports of fresh produce, such as cheeses, fresh berries, goat yoghurt, and many other fresh products that could be ably supplied by Gippsland producers.
However, in most cases these producers would have to commit to increasing their production, or include a number of others not already in the mix.
Given Gippsland's climate and prime agricultural land, all of this is possible. That is not to say that other areas of Victoria could not do the same.
When some of these things eventuate the benefits of this trade delegation will be fully appreciated.
Just consider if the 100 containers of lamb were able to be sourced how good it would be for the lamb and sheep industry.
The potential lift in beef meat exports is expected and will have an effect on prices, but the biggest turn-around, and the one all cattle producers are waiting for, is the start to herd rebuilding.