Australian beef and sheepmeat prices are set to remain strong in 2020, as African swine fever continues to grip the global animal protein sector and pull down overall sector growth, according to Rabobank’s Global Animal Protein Outlook 2020.
While it brings uncertainty to all markets, African swine fever offers opportunities for some, the report said, with Australia standing to benefit from the limited global protein supplies.
The bank’s flagship annual global outlook for the animal proteins sector, titled Seeking Opportunities in an Uncertain World, said while production growth was expected in most regions in 2020, "the impact of ASF in Asia overwhelms the outlook", as China’s production losses exceed the growth in all other regions combined.
The report said Chinese pork production was expected to decline by a further 10 to 15 per cent from 2019 levels and, while less than the decline in 2019, it would ensure 2020 production was well below the 2014-18 average prior to the major ASF outbreak.
Pulling down overall growth, the report said, ASF also brought uncertainty to the outlook alongside trade disputes, sustainability developments and the ongoing rise of alternative proteins.
For Australia, Rabobank senior animal proteins analyst Angus Gidley-Baird said while global demand would keep local beef and sheepmeat prices strong, any further upside would be driven by an improvement in seasonal conditions as producers come back into the market to restock.
“There is considerable upside potential for prices, given livestock inventories for both sheep and cattle are at their lowest levels in over 20 years,” he said.
“And it is this low stock availability that will see the market remain highly sensitive to substantial rain events.”
Mr Gidley-Baird said while seasonal conditions remained dry, prices were less likely to experience any large downside, as there was “simply not the volume of stock in the market to drive any big crash in prices”.
He said for beef, slaughter rates and production were forecast to be lower in 2020, following high female slaughter in 2019 which heavily reduced breeding cow numbers.
“Lower inventory numbers and strong global markets will support prices for heavy-finished cattle, in particular.
“While lighter classes of cattle will remain more exposed to seasonal variability.
“That said, the price spread between heavy and light cattle will narrow as soon as it rains, with lighter cattle set to achieve the biggest gains in price.”
In the sheep market, Mr Gidley-Baird said continuing dry conditions through many sheep-producing areas in 2019 had limited the ability for widespread restocking, with lamb production expected to remain steady in 2020.
“That said, an improvement in seasonal conditions could lift production,” he said.
“Strong export markets – principally the US – will support lamb prices.
“But any upward price movement as a result of low numbers is likely to test margins unless we start to see increases in US lamb import prices.”