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INSIGHT


The good news for beef

There is good news in Australian beef, despite some in the sector doing it hard.

A lot has been written about the record cattle prices we're seeing across the country. A key reason for that is the rebuilding phase of Australia is going through following a number of years of drought.

But the consequence of the restocking phase is less cattle coming to market. As a result, the processing industry is under capacity, which is tough for what is now Australia's largest manufacturing sector.

Compared to last year, we're seeing materially lower volumes going to Australia’s traditional beef export markets of the US, China, Korea and Japan. At the same time, we're seeing competition - particularly from North and South American countries - muscling into those markets.

You can bet even when Australia’s volumes return back to normal, those countries will be working hard to defend the access they've gained there.

But there is good news. Demand for beef globally remains strong, notwithstanding the impact of pandemic. And here in Australia, we continue to produce a product the world wants. So the outlook is really positive.

On top of that, we see emerging opportunities in new markets that we at ANZ encourage the industry to focus on. If the last 12 months has taught us anything, it's that in a world of pandemics, geopolitical tensions, tariffs and trade barriers, it pays to have a diversified customer base.

On top of those traditional markets for Australian beef, we see opportunities emerging in places like the Middle East, Indonesia, the Philippines and Vietnam, and believe the sector will be looking towards these regions in the future.

Ian Hanrahan is Head of FB&A Australia at ANZ Institutional

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