Beef prices climb as supply contracts in key markets
With production volumes contracting in most major beef-producing regions, global cattle prices have continued to rise across recent months.
Record beef prices are driving confidence among sheep and beef farmers, says Parsons. Lamb and wool prices are also up, all adding to the bottom line. “We are seeing record pricing on beef than we have ever seen before. That is increasing the confidence among sheep and beef farmers, particularly those with more beef.”
A total 75% of sheep and beef farmers expect improvement in their own farm businesses in the next 12 months, Rabobank’s quarterly farmer confidence survey to November shows. This “markedly bullish” farmer sentiment had spiked from 48% in the last quarter, says chief executive Ben Russell. Only 2% of sheep and beef farmers expected their own farm’s performance to worsen, down 7% from the previous survey.
Meanwhile 52% of dairy farmers expect their own farm performance to worsen; only 11% believe it will improve and 35% expect similar performance.
Parsons says a “natural human reaction” is that sheep and beef farmers are no longer feeling like the poor cousins to dairy, which is also boosting their confidence.
“I have long argued that low confidence in the sheep and beef sector [formerly] has been because they were too busy looking over the fence at dairy which has been doing well. Now we see the flip side where dairy is not doing well and sheep and beef are doing better.”
But the boosted confidence among sheep and beef farmers because of beef prices looking particularly strong was the “real positive”. While “crystal balls” are always dangerous, it looks good for the next 24 months at least, with the US beef herd still rebuilding. Beyond that it is hard to pick.
“Whether it carries on at the levels we have now… I wouldn’t be surprised if it comes off a bit, but to the $5/kg range rather than the $4 range for beef.
“Sheep meat is looking reasonable stable – there’s a bit of schedule falling at the moment, a little bit of concern from the markets but the long run average is looking quite reasonable and wool returns have picked up which all add to the bottom line of sheep and beef farmers.”
Parsons says a few dairy runoffs may go on the market and there won’t be so much pressure from dairy conversions this year. More sheep and beef farmers may buy the neighbouring farm but that will just offset the demand drop in the dairy sector.
