The nation’s cattle herd is forecast to rise for the first time in two years as a result of anticipated summer rain in the country’s north and east coupled with high prices, according to a leading industry research body.
Meat & Livestock Australia’s October projections predict the national herd will reach 25.1 million head in the year-to-June 2021 — a 1.9 per cent increase — off the back of a 12 per cent decrease in the two years to June 2020.
However a sharp decline in cattle slaughter is predicted to result in the country’s lowest national beef production since in almost 20 years.
MLA market analyst Stuart Bull said while the industry faced a series of unique and unprecedented market conditions across both supply and demand, the outlook for the industry was positive.
While the COVID-19 pandemic has disturbed some markets and market segments, overall, both global and domestic demand for Australian beef remains stable.
“There is the expectation that an earlier La Niña influenced monsoon season will offer northern producers greater confidence. Meanwhile, cattle continue to flow south, as northern sellers take advantage of strong prices and southern buyers, who have benefited from winter rains, look to rebuild ahead of an anticipated supply shortage.”
As a flow-on effect from the forecast 17 per cent decline in adult cattle slaughter — with 2020 slaughter estimated at seven million head — Mr Bull said national beef production was expected to contract 15 per cent year-on-year to 2.05 million tonnes carcase weight.
“This contraction would represent the lowest level of national beef production since 2001,” he said.
“National adult carcase weights are expected to lift 9.4kg or 3% to average 293kg/head in 2020, driven by improved feed availability and a steady fall in the share of female cattle killed.”
Mr Bull said the combined impact of African Swine Flu on Chinese Pork Supply and growth in population and middle-class incomes would continue to underpin appetite for Australian beef.
While export volumes were down on 2019 due to supply shortages, he said the export value to July rose 4 per cent, to just short of A$6 billion.
“The beef export forecast for 2020 remains unchanged from the July update, at just over one million tonnes shipped weight (swt), a decline of 17% relative to 2019,” Mr Bull said.
Live cattle export shipments remain reasonably stable and are expected to return close to 2018 levels, though down 16% on 2019.
Mr Bull said low supply and high demand should keep pressure on the cattle market.
“The sharp gains that cattle prices experienced in early 2020 have been consolidated, and apart from a short COVID-19 driven slump in March and April, remain at record levels,” he said.
“Restocker demand will likely remain robust for the remainder of 2020, and high cattle prices are expected across summer.”
“With the throughput of finished cattle reducing further, processors have upheld strong price grids, underpinned by high restocker and feeder prices.
Global markets have not had much effect on domestic prices, with cattle continuing to trade at record levels throughout the year.