TOM'S MARKET MUSTER: German FMD outbreak shakes markets, Aussie wool prices climb

16 January 2025
What's ahead for Australia's livestock markets? Pic: AgriShots
An article by  Tom Rookyard

Cattle market remains strong for now

After a flurry of activity and strong prices throughout the opening of 2025 at Southern Weaner sales and online on AuctionsPlus, the cattle market looks to have jumped forward but not raced away to a senseless position.

On AuctionsPlus, the first cattle sales of the year opened with an 89% clearance rate, while the Meat & Livestock Australia (MLA) Eastern Young Cattle Indicator, opened on January 6 at 725c. However, has since dropped and hovered around the 705c-707c mark. This is a clear indicator that while there is confidence in the cattle job, producers, lot feeders, and processors are not getting too far ahead of themselves - just yet.

Impact of German FMD outbreak

This week Germany has announced an outbreak of foot and mouth disease (FMD), its first in almost 40 years. The disease was reported to have been found in dead water buffalo on a farm just out of Berlin. While devastating for the German beef industry, the impacts will range more than just domestically for the country.

Data from the European Union, shows that Germany is the second largest beef producer of the EU. Across 2022, 2023 and 2024, Germany produced 15% of the EU's beef, second to France accounting for an average of 21%, with Spain in third accounting for 11% across that period.

Further to this, Germany primarily exports unfrozen beef to its neighbours - Switzerland, Norway, Bosnia and Herzegovina making up the largest markets, while the volume is not one of the heavy hitters internationally (frozen beef meat exports in 2023 being only 30,000 tonnes), this gap will need to be filled.                                              TR-17.01

Gap between light and heavy steers widens

The gap between the MLA Heavy and Restocker Steer indicators has been on the rise since July 2024; highlighting growing restocker and trading confidence, and 2025 has followed suit.

The gap in September was only 22c, but has since risen to 55c in December, and so far in mid-January it is sitting at 56c. After an extremely stable cattle market throughout 2024, there has been signs and signals that the restocker market could continue to rise as producers take advantage of their feed supply.

Argentinian beef at record levels

With the American beef industry in short supply, there is many other beef industries benefiting from the impacts. Argentina, which has a cattle herd of ~53m head, is witnessing record prices. Argentina is a top five beef exporting country, estimated by MLA to make up ~6% of the global trade in 2022.

Reviewing the average steer price from the Liniers Cattle Market in Buenos Aires, recent figures show the price at 2,264.201 Argentine Peso/kg in Dec 2024. This is a rise of 34% since February, and the largest since records began in 1995.   

TR.17.01.2

Wool market rises off the back of a weak Australian dollar

The weakening Australian dollar is boosting the Australian Wool market, with the market jumping across all microns this week. Since December 16, the AUD to USD has fallen from 0.64c to 0.62c - a 3.2% swing making Australian wool much cheaper in the global market.

The AWEX Eastern Market Indicator has closed this week at 1,190c/kg, a rise of 36 cents. On Tuesday this week, the EMI had is largest daily rise since February 2023 when it jumped by 44c, which was followed on day two of a much steadier market remaining at these levels.

Source: AuctionsPlus, MLA, European Commission, CEIC, AWI.

 


Tom Rookyard is the General Manager at Ottley Livestock Finance.

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