Rabobank's seasonal outlook predicts cattle prices to stabilise

Rabobank has released its Australian Beef Seasonal Outlook 2023 report, which showed prices would track in a "narrower range" but remain historically high.

Rabobank senior animal protein analyst Angus Gidley-Baird said a more-stable price range for this year would allow the supply chain to "rebalance", once more expensive cattle cleared.

"While high cattle prices in recent times have been great for producers selling cattle, this legacy remains and we are now working our way through some very expensive cattle in much softer consumer markets," he said.

"Cattle prices have returned to more average levels, making Australian beef competitive again and creating a more sustainable market for everyone in the supply chain."

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Rabobank forecast that April prices would continue throughout the season as cattle supplies grow and producer demand declines.

Mr Gidley-baird said if the predicted Eastern Young Cattle Indicator (EYCI) range of between 700 cents a kilo and 800 c/kg maintained, then it would be 30 per cent below the 2022 average.

He said greater stability and current farm profits would give farmers the opportunity to plan and prepare for a possible dry season ahead.

"The record cattle prices of early 2022 could not last forever," he said.

"Now, after a significant contraction, we believe the current prices are more in balance with market fundamentals and we expect cattle prices to hover in a relatively narrow band around current levels for 2023."

He said Rabobank believed farmers would have almost-normal breeding numbers, and Australia would have higher slaughter rates this year after the "lowest cattle slaughter in 37 years".

Rabobank predicted cattle slaughter rates would rise by 16pc this year and continue to rise in 2024, but there would be less cattle trading on the market.

"The past couple of years of high cattle prices and favourable seasonal conditions have encouraged producers to trade more cattle than usual, rather than build breeding stock," he said.

"Now, with lower cattle prices, drier seasonal conditions and the recovery of breeding numbers, we expect producers will revert to previous practices and reduce the level of trading."

Mr Gidley-Baird said Japanese and South Korean consumer demand had softened, but the US and China could provide export growth opportunities.

"Overall, challenging economic conditions and slower consumer demand will be countered by shrinking US beef supplies and recovering Chinese food service," he said.