The recent slide in Australian Heavy Steer pricing has seen the spread between the Aussie and US equivalent heavy steer widen to the highest level it has been on record.
Converting Australian Heavy Steer pricing to US cents per kilo shows the current domestic heavy steer price here is 249 cents below it’s US equivalent. In A$ terms thats a discount of around 390 cents.
The Australian herd rebuild appears to be coming to an end, and much of the aggressive restocking buying we have seen in previous years has moderated significantly as producers begin to prepare for a drier spell. Over in the USA, they are into their fourth year of herd liquidation and historically towards the end of their liquidation cycle they often see pricing begin to peak as their supply tightens. This has pushed US cattle prices to record levels during 2023.
Analysis of the percentage spread discount shows that the Australian Heavy Steer has moved to the widest discount on record at nearly 62% this week, eclipsing the previous record of 59%, which was set during the 2014 season – in the midst of the horrible 2013-15 drought.
The long term average percentage price spread between the Aussie and US heavy steer sits at a discount of 28% so the current level is nearing uncharacteristic extreme levels. These are levels normally seen when Australia goes through drought and cattle slaughter peaks above 9 million head per annum. Current slaughter volumes are only expected to reach around 7 million head in 2023, so the current pricing discounts are not representative of what is happening on the ground domestically.