Colliers International_Northern Beef 2016

1 North Australia Beef Market Overview COLLIERS INTERNATIONAL
North Australia Beef
Market Overview
COLLIERS INTERNATIONAL

The Northern Territory beef market is booming meaning beef cattle properties will be the most sought-after
assets by agribusiness investors in 2016. Colliers International’s team of 28 dedicated Australian rural and
agribusiness professionals can deliver you better results, faster when progressing your property goals in 2016.
Australia is one of the world’s most efficient producers of cattle
and the world’s third largest exporter of beef. The off-farm value
(domestic expenditure plus export value) of the Australian beef and
cattle industry was $18.21 billion in 2014-15 (ABS, MLA estimate).

The current environment for beef in Australia has resulted in an
increase in exports previously unseen in Australian agricultural
history. These increases are due to a number of simultaneous
factors including global demand, a weakening Australian dollar, a
shortage of breeding stock, and recent rains in previous drought
affected areas.
Domestically in Australia, prices remain very strong with the
Eastern Young Cattle Indicator (EYCI) reaching a record 600c/
kg in early 2016 resulting in a 39 percent uplift in average prices
between 2015 and 2016. This price increase is due to declining
numbers in the national herd; unpredicted rainfall during the
El Nino period; reduced slaughter numbers through Australian
Abattoirs and also the strong demand from international
consumers. Beef exports have exceeded previous records for
three consecutive years and as previously stated is predicted to
sustain solid margins. However, it is noted that export volumes will
decrease as a result of an increase in slaughtering of female cattle
to 28 per cent based on a five-year average.
The Australian dollar is expected to stabilise at current levels for
the medium term driving continued demand for Australian beef in
Asia. This demand will also increase the need for reliable property
to raise cattle, which in turn will positively impact medium sized
beef enterprises. It is reasonable to expect the past volatility of the
cattle trade will be reduced with the signing of various Free Trade
Agreements by our major trading partners, particularly China,
with its anticipated increased levels of beef consumption in the
years ahead. Combined with the anticipated drop in the Australian
herd size to a 20 year low, the optimism about beef can justifiably
continue into the medium term with the only mitigating factor being
potential increased supply of pork and beef from the US and Brazil.
The probability of a La Nina weather pattern in the year ahead is
emerging, meaning re-stockers are now competing with feedlots
and processors. There is every reason for optimism in the beef
industry in the medium and long-term, with wealthier populations
having an insatiable appetite for clean green protein in their more
westernised diets, a trend that will continue in the years ahead.
Stock numbers will continue to have an effect on property sales
in 2016. As supply is reduced, properties with significant stocking
rates will be an attractive factor for potential investors.
Additionally, given that cattle prices are at historically high levels
and the national herd size is shrinking, restocking is a notable
expense, Therefore, properties offered to the market on a walk in
walk out basis represent the potential to acquire a herd without the
high costs associated with freight and the complexities involved in
purchasing new stock. As a result properties offered with stock
included are expected to attract significant interest.
High confidence is fuelling interest in the beef market with demand
not only from domestic investors but also from international
investors, supply chain participants and institutions. This has had
had a significant impact upon property sales over the last year with
some considerable assets exchanging hands in the last 12 months.
The most notable event occurring at present in the cattle industry
is the marketing of the Kidman and Co’ aggregation of properties
with the sale set to conclude in Mid-2016. It is reported that half
of the potential bidders are from overseas including parties from
China, Switzerland and America.
The other half comprises domestic investors including super
funds, investment syndicates or high net worth individuals. With
approximately 180,000 head of cattle and with cattle prices at
record levels it can be seen as an attractive investment for higher
end agribusiness investors.
North Australia Beef Market Overview
INDUSTRY OVERVIEW

The Australian cattle herd was estimated to fall by seven percent
over the 12 months to 30 June 2015 to 27.0 million head and
is forecast to decline a further three percent by 30 June 2016
to 26.1 million head. The graph above illustrates changes in the
Australian beef and dairy cattle herds against changes in the total
herd since the 2001-02 financial year. Queensland maintains the
largest herd amongst the states with approximately 48 percent of
the total Australian herd followed by NSW with 21 percent.
It is Colliers International view that while live beef cattle prices
remain above $3/kg that proven Animal nutritional, Animal health
& Animal Fertility techniques will be applied broadly across
the North Australian herd with the goals of driving increased
conception rates higher & higher overall post weaning weight gain
and health.
0
100
200
300
400
500
600
700
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
EYCI(₵/kgcwt)
EASTERN YOUNG CATTLE INDICATOR
2008 TO PRESENT
TOTAL CATTLE HERD BY STATE/TERRITORY
2014/15
In early 2016 cattle prices are forecast to remain at record
levels. Meat and Livestock Australia (MLA) has forecast an
average of 505 cents a kilogram (carcase weight) for 2016
which shows a 39 per cent increase on the average for 2014.
The trend line in the graph below indicates the increase in
prices of the eight year period.
As the National herd continues to fall, adult carcase weights have
continued to increase in 2015, with a projected forecast of 6%
increase over the next few years as seen in the graph below.
According to the Australian Bureau of Statistics (ABS) Beef
and veal production is forecast to fall in 2015–16 by 9 per cent
to 2.4 million tonnes, following the record 2.7 million tonnes
produced in 2014–15.
The national herd is estimated to fall by 12% to 25.9 million
head by the end of 2017. This will represent the largest fall
since 2013 and become the lowest national herd for 24 years
(1993) (MLA)
Australian cattle and calf slaughter is forecast to fall by 11 per
cent in 2015–16 to 9 million head after reaching a 36-year
high of 10.1 million head in 2014–15. This is due to unexpected
rain events that have encouraged producers to hold onto stock.
Exports remain relatively mixed with decreases in shipped
weight to Japan (-9.5%) and United States (-31%) yet
increases in shipped weight to China (12.5%) and Korea (8.3%)
for the 2015/16 period.
Live cattle exports over the past 10 years have continued to
grow especially because of the emerging Asian economies
increasing their consumption of Beef products. China has
started accepting live cattle with a ‘test’ load of 150 cattle
being flown to the country. In 2016, live cattle exports are
expected to decline as supply is reduced. However, demand
continues to increase. Markets are continuing to grow with a
notable 71% increase in exports to Vietnam in the 2015 period.

The Japan-Australia Economic Partnership Agreement and the
China-Australia Free Trade Agreement are in place allowing
reduction in tariffs over the next few years, which will assist
the cattle export industry in further accessing these markets.
As seen below, in 2015 China and Japan make up 34% of beef
and veal exports.
CURRENT PRICING AND PRODUCTION
Source – MLA and Colliers International
265
270
275
280
285
290
295
300
0
5000
10000
15000
20000
25000
30000
35000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Forecast 2017 to 2020
WeightofCarcase(kg)
HeadofCattle('000s)
Herd Numbers ('000) Slaughter Numbers ('000)
Ave. Carcase Weight (kg)
HEAD NUMBERS VS. SLAUGHTER NUMBERS
VS. AVERAGE CARCUS WEIGHT
NSW
20%
Victoria
15%
Queensland
44%
SA
4%
WA
7%
Tasmania
3%
NT
7%
NSW Victoria Queensland SA WA Tasmania NT

Darwin
Western
Australia
Northern
Teritory
South
Australia
New South
Wales
Queensland
Tasnmania
Brisbane
Sydney
Melbourne
Hobart
Adelaide
Perth
The strong demand for beef products can be seen to have a
significant impact upon investors wanting to access the beef
producing market. New South Wales beef cattle properties,
particularly those in close proximity to Sydney and major regional
centres will be the most sought-after assets by agribusiness
investors in 2016.
Stock numbers will continue to have an effect on property
sales in 2016. As supply is reduced, properties with significant
stocking rates will be an attractive factor for potential investors.
Additionally, given that cattle prices are at historically high levels
and the national herd size is shrinking, restocking is a notable
expense.
High confidence is fuelling interest in the beef market with
demand not only from domestic investors but also from
international investors and institutions which has had a significant
impact upon property sales over the last year. The most notable
event occurring at present in the cattle industry is the marketing
of the Kidman and Co’ aggregation of properties. Half of the
potential bidders are from overseas including personnel from
China, Switzerland and America. The other half is made up of
domestic investors including super funds, investment syndicates
or high net worth individuals. With approximately 180,000 head of
cattle and with cattle prices at record levels it can be seen as an
attractive investment for higher end agribusiness investors. This
sale will set the benchmark for further large cattle aggregation
sales predominately throughout the northern region of Australia.
The northern beef market comprises the Northern Territory,
Queensland and the northern portion of Western Australia. Within
Australia’s total broad hectare beef producing farms (32,350) the
Northern market comprises approximately 8,800 (ABARES 2012-
13). The northern market is characterised by the production of
primarily Bos Indicus breeds including Brahman, Santa Gertrudis
and Droughtmaster with the vast majority developed for export.
In recent times the northern market has been operating in adverse
market conditions of a high Australian dollar and extensive
periods of low rainfall, particularly throughout Queensland and live
cattle export trade restrictions into Indonesia.
Herd liquidation was rapid during 2013–14 and the first half of
2014–15. Generally unfavourable seasonal conditions resulted
in lower calving rates and higher than average mortalities.
Slaughter and live export numbers were high, supported by strong
international demand. The extent of herd liquidation is reflected in
monthly female cattle slaughter numbers, which increased year-
on-year every month from June 2012 to December 2014. By 30
June 2015 the cattle herd is forecast to fall to 27.0 million head
(ABARES).

Australia’s livestock export industry is enjoying a period of
sustained growth which is delivering significant flow-on benefits
to the rural sector and the broader national economy. Live export
prices defied the trend in the Southern Markets throughout
October 2015 following the release of 200,000 Indonesian
permits, Darwin feeder cattle prices reunited as export buyers
aggressively bidding as fewer northern cattle availability was
evident.
IMPACT ON PROPERTY VALUES
NORTHERN BEEF MARKET
Therefore, properties offered to the market on a walk in
walk out basis represent the potential to acquire a herd
without the high costs associated with freight and the
complexities involved in purchasing new stock. As a result
properties offered with stock included are expected to
attract significant interest.
The Japan-Australia Economic Partnership Agreement and the
China-Australia Free Trade Agreement are in place allowing
reduction in tariffs over the next few years, which will assist
the cattle export industry in further accessing these markets.
As seen below, in 2015 China and Japan make up 34% of beef
and veal exports.
AUSTRALIAN BEEF EXPORTS BY DESTINATION
Source – Meat and Livestock Australia
Japan
22%
US
32%
Korea
13%
China
12%
Middle East
4%
Canada
3%
Other
14%
Japan
US
Korea
China
Middle East
Canada
Other
Northern Beef Production - tropical breeds
Southern Beef Production - temperate breeds
Both temperate and tropical breeds

Due to Australia’s low population, exports play a key role in
facilitating the distribution of the country’s high level of beef cattle
production. These exports comprise chilled and frozen meat
products, breeders and live animals for offshore processing. A
key factor within the northern beef market is the distribution of
live cattle. In 2014-15, Australia exported 1.38 million head, 22
percent rise on the previous year which accounted for 74 percent
of its total beef and veal production to 86 countries.

The value of total beef and veal exports in 2014-15 was
$9.04 billion. The beef industry (including live cattle exports)
contributed 23 percent to the total farm export value of $44 billion
in 2014-15 (FOB) (ABARES Agricultural Commodities September
2015).
Indonesia was Australia’s largest live cattle export market,
taking 746,193 head, which was an increase of 20 percent on
the previous year and valued at $601 million FOB. Indonesia
accounted for 54 percent of Australia’s live exports.
One of the risks of record beef prices in Australia to the beef
industry is the potential shift to substitute proteins (both red and
white meat), as prices put pressure on the global consumer.
An example of competing protein is Buffalo beef, known as
“Carabeef”. In recent times Indonesia has expressed concern
toward high domestic beef prices and are exploring a move
towards the import of Buffalo meat from countries such as India
who is one of the world’s largest producers and exporters. This
move may take time to reach a commercial level, but it highlights
the effects of high prices and early stage signals; a signal that is
relevant to Australia’s live export trade.
In 2015 Australia exported over 5000 head of buffalo from the
Northern Territory with the majority sent to Vietnam (4,468) and
balance to Brunei (625 head). This represents strong growth with
further growth expected in 2016
As seen below exchange rates based in USD terms demonstrate
a weakening of currencies in AUD, GBP and IDR terms with CNY
showing weakness more recently. This creates further demand
for rural exported product and is another element which currently
supports the strong sentiment in the Australian beef property
market.
THREAT OF SUBSTITUTE PROTEINS
GLOBAL EXCHANGE RATES
AUSTRALIAN LIVE EXPORT TRADE (NT, WA & QLD)
2008 - 2014
Source – Livecorp, Colliers International Research

The below illustrates the most recent large scale transactions of beef assets throughout North Australia.
PROPERTY LOCATION STATE AREA
SALE
DATE $/AE
TRANSACTION
TYPE SALE PRICE
1 SOMERVILLE RICHMOND QLD 29,235 ha Jun 2012 $2,572 /AE WIWO $9,400,000
2 NEUMAYER VALLEY CARPENTARIA QLD 143,000 ha Dec 2012 $1,469 /AE WIWO $30,000,000
3 LOTUS VALE CARPENTARIA QLD 125,000 ha Jun 2013 $1,400 /AE WIWO $17,500,000
4 KANGERONG STATION CHARTERS TOWERS REGIONAL QLD 22,400 ha Dec 2013 $3,240 /AE WIWO $9,070,730
5 MAYFIELD STATION DOUGLAS-DALY NT 147,300 ha Jan 2014 $956 /AE WIWO $9,800,000
6 WILLEROO STATION STURT PLATEAU NT 171,000 ha Feb 2014 $1,079 /AE WIWO $15,100,000
7 RAVENSWOOD CHARTERS TOWERS REGIONAL QLD 47,600 ha Jun 2014 $2,269 /AE WIWO $9,000,000
8 BUNDA STATION VRD NT 178,000 ha Dec 2014 $1,071 /AE WIWO $15,000,000
9 DOUGLAS STATION DOUGLAS-DALY NT 154,844 ha Apr 2015 $1,071 /AE BARE $8,000,000
10 MOROAK & GOONDOOLOO STATION ROPER RIVER NT 232,900 ha TBA $921 /AE WIWO $17,500,000
11 BOLWARRA BURKE QLD 129,000 ha May 2015 $1,547 /AE WIWO $10,500,000
12 BARKLY DOWNS MT ISA REGIONAL QLD 9,455,000 ha Jul 2015 $1,051 /AE BARE $61,000,000
13 ESMERALDA CROYDON QLD 406,000 ha Feb 2016 $1,379 /AE WIWO $40,000,000
14 WALLHOLLOW & CRESWELL DOWNS BARKLY NT 999,700 ha Dec 2015 $2,086 /AE WIWO $97,000,000
15
MURRAY DOWNS & EPENARRA
STATION
CENTRAL DESERT NT 825,000 ha Dec 2015 $970 /AE BARE $20,000,000
16 GLEN HELEN & DERWENT STATION CENTRAL DESERT NT 308,000 ha Nov 2014 $1,364 /AE WIWO $12,000,000
17 LIVERINGA & NERRIMA STATION WEST KIMBERLY WA 468,000 ha Oct 2014 $1,880 /AE WIWO $80,000,000
18 FOSSIL DOWNS WEST KIMBERLY WA 400,000 ha Aug 2015 $1,950 /AE WIWO $30,000,000
NORTHERN AUSTRALIA COMPARATIVE SALES
1 SOMERVILLE
2 NEUMAYER VALLEY
3 LOTUS VALE
4 KANGERONG STATION
5 MAYFIELD STATION
6 WILLEROO STATION
7 RAVENSWOOD
8 BUNDA STATION
9 DOUGLAS STATION
10 MOROAK & GOONDOOLOO STATION
11 BOLWARRA
12 BARKLY DOWNS
13 ESMERALDA
14 WALLHOLLOW & CRESWELL DOWNS
15 MURRAY DOWNS & EPENARRA STATION
16 GLEN HELEN & DERWENT STATION
17 LIVERINGA & NERRIMA STATION
18 FOSSIL DOWNS
19 ELIZABETH DOWNS
WIWO = Walk in walk out with livestock
BARE = Excluding livestock

Colliers International does not give any warranty in relation to the accuracy of the information contained
in this report. If you intend to rely upon the information contained herein, you must take note that the
information, figures and projections have been provided by various sources and have not been verified by
us. We have no belief one-way or the other in relation to the accuracy of such information, figures and
projections. Colliers International will not be liable for any loss or damage resulting from any statement,
figure, calculation or any other information that you rely upon that is contained in the material.
FOR MORE INFORMATION CONTACT
Rawdon Briggs
Director | Transaction Services
0428 651 144
rawdon.briggs@colliers.com
Ben Forrest
Manager | Transaction Services
0427 580 000
ben.forrest@colliers.com
www.colliers.com.au
VALUATION & ADVISORY SERVICES
Shaun Hendy
Director | Valuation
0427 638 479
shaun.hendy@colliers.com
Jason Osborn
Associate Director | Valuation
0488 711 454
jason.osborn@colliers.com
TRANSACTION SERVICES

Colliers International_Northern Beef 2016

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