Let the good times roll in agriculture, a Victorian analyst predicted at a series of meat market updates by the Local Land Services across the Northern Tablelands last week.
Simon Quilty is the managing director of MLX Pty Ltd, a company which specialises in risk management and brokering beef swaps primarily between Australia and North America.
Last week the Northern Tablelands LLS brought him up from Wangaratta Victoria to speak at a series of workshops in Guyra, Walcha and Inverell to share his predictions on the impending opportunities for cattle producers in Australia.
“If my predictions are correct then global demand could see beef prices in late 2018 rise by up to 30 per cent,” Mr Quilty said.
An unprecedented expansion of the global middle class with a penchant for beef and seafood will see demand outpace supply as cattle numbers are currently down globally and it will take time for herd numbers to increase Mr Quilty says.
“I think we will see a drop in prices next year but then enter a super demand era for the next four to five years, possibly until 2030,” he said.
“I wrote the super demand cycle paper because over the 25 years of trading that I’ve done I kept looking at what is happening currently and I believe I’ve seen it happen five times in the last 25 years. This cycle though is particularly strong and I believe this is only the first year.”
After the meeting, Walcha Landmark Boulton’s stock and station agent proprietor Bruce Rutherford said he thought what the numbers were indicating was quite extraordinary.
“In the forty years I’ve been in the stock and station business I’ve never seen the likes of what is going on at the moment,” he said.
“It would seem we are going to remain in an agricultural boom for the foreseeable future which is wonderful for rural and regional communities.”
A super demand cycle is when supply and price increase at the same time.Simon Quilty
Mr Quilty said dry winter conditions next year and a price correction would see a drop in Australian beef prices before they rose again.
“By mid 2019 the Eastern Young Cattle Indicator (EYCI) should be back at today’s levels above 600 Australian cents per kilogram or 325 Australian cents per live weight kilogram with a sustained supercycle,” Mr Quilty said.
“How you manage your stock next year is the critical part of it and these predictions are based on no drought for Australia. If we should see drought for the next two years these predictions get much harder as a rebound in prices will be unlikely. ”