Plentiful rains earlier in the year encouraged farmers to add to livestock after the intense drought shrank herds in Australia. That’s created a shortage of cattle for slaughter and meat production, with the benchmark Eastern Young Cattle Indicator trading near a record high.
Still, analysts warn that prices cannot remain decoupled from the broader global economic downturn forever.
“We are left wondering how sustainable cattle prices really are in the midst of a global pandemic and what may be the worst recession since the Great Depression,” National Australia Bank said in a June report. “With prices moving in the opposite direction to local prices in our major competitors, prices will likely fall once restocker interest recedes.”