MarketPulse

TOM'S MARKET MUSTER: US election opens door for beef market, but could 'shear' off price of Aussie wool

Written by Tom Rookyard | Nov 8, 2024 12:58:42 AM

With the US election done and dusted, we take a look at potential impacts from the new government. Across 31 years, from 1989 through to 2020, using USDA figures American beef exports to China have not been greater than 4% of the total US Beef exports. Across the past five years since 2021, China has made up an average 14% of the US Beef exports. Should Donald Trump make good on his pledged to implement 60% tariffs on all Chinese goods imported to the US, and 10% to 20% on tariffs from all other countries, there is the potential of further trade disputes between the US and China - leading for someone else to pick up that import market into China.

Store cattle opportunity on AuctionsPlus

Store and feeder cattle took buyers interest on AuctionsPlus last week (November 1); seeing a rise in every weight class of steers and unjoined heifers. Light steers under 280kg topped at 530c, the second week in a row they have topped over 500c. Feeder steers 330kgs-400kgs average at 385c, topping at 414c; while heifers of the same weight topped at 397c. The gap between steers and heifers has been well documented as an opportunity for traders, for the past two weeks there has been over a 100c gap between 280kg-300kg steers and heifers.

Rosy outlook for lamb

With the peak lamb selling season in progress, a look at current saleyard data shows that 2024 has already seen strong numbers of lambs offered. January-October for 2024 saw 8m head through saleyards, this highest since 2015 when the same period saw 8.5m head through saleyards. This week AuctionsPlus saw numbers rose by 25,000 head to see 104,000 sheep and lambs offered online. Crossbred lambs made up 39,000 head of that number, however prices dipped again this week, with the average for cross-bred lambs falling 11c to 350c. The share weight of numbers is the only thing slowing the lamb market at this stage. With a smaller flock heading into 2025 and strong export demand, there is a rosy medium to long-term outlook for lamb.

Wool market holds ground, but Trump poses a concern

This week the wool market saw 36,000 bales offered (down 6,000 on the 2023/24 season), with a 9.3% clearance rate. The AWEX Eastern Market Indicator (EMI) rose 5c to close off the week at 1131c. To compare historically, at the same time last year, the EMI was at 1129c. Overall hesitant and tentative global economies in Europe and Asia are not pushing demand for the wool industry currently. The US election could also have significant impacts on the wool industry. This week Reserve Bank of Australia Assistant Governor Christopher Kent said Mr Trump’s promised tariffs would likely ”push up” the US dollar, and as an exporting industry that is based on the USD, any weakening of the USD to AUD would have negatives impacts for Australian wool exports.

Brazil breaking records                                                                       

Brazil, the third largest beef producer in the world, continues to break records in the sector. The Foreign Trade Secretariat (Secex) of the Ministry of Development, Industry, Trade, and Services (MDIC) is reporting that across the first three weeks of September, 185,500 tonnes were exported. At that pace, Brazil will set a new monthly record for the sector. This is showing the global demand for beef - Brazil is currently in herd liquidation hitting record slaughter levels.

SOURCES: USDA, AuctionsPlus, MLA, AWEX, AWI, RBA, MDIC.