High price of cattle puts pressure on processors

The record levels of Australian cattle prices will continue to put pressure on meat processors next year.

ANZ’s latest Agri Commodity Report showed that the growth in cattle prices will exceed the rise in retail beef prices putting pressure on meat processers.

Head of Institutional Food, Beverage & Agribusiness Ian Hanrahan said beef processing operators will have to look at ways to work though this including reducing operating capacity and managing labour costs.

“For those processors with a diverse export customer base, the strong global demand for grain fed beef programs has provided some buffer in recent times,” Mr Hanrahan said.

“Should cattle prices stay high, then it could mean that 2022 may see further rationalisation in the processing sector, as margins become unsustainable for some operators.”

“At the same time, the fact that some of Australia’s largest beef processors have continued to expand, particularly across other animal proteins, has emphasised the strength of some of the bigger players.”

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