Positive signs for herd rebuild

With a renewed sense of optimism in the cattle market, the prospect of the national herd entering an expansion phase has emerged. The latest three-month outlook from the Bureau of Meteorology also provides excellent prospects over the coming months, with May through July likely to see above average rainfall across most of Australia.

In March, the National Livestock Reporting Service (NLRS) reported an 18% decline for eastern states cattle slaughter compared to 2019 levels, as producers held back cattle. The latest ABS production and slaughter data in February also started to show some promising trends.

Adult cattle slaughter in February declined 8% on 2019 levels, to 634,000 head. Queensland accounted for 267,000 head, down 17% on year ago levels, while New South Wales slaughter fell 5% and Victoria remained steady year-on-year. March ABS data will likely show a much greater drop in slaughter compared to year ago levels, given the rain continued to fall.

In February, the female portion of total slaughter reached 52%, the lowest level since January 2019. On a 12-month rolling average basis, it will take time to achieve the 47% required to signal the national herd is expanding, given the extent of breeding stock turnoff in 2019. However, the prospect of this now occurring at some stage in 2020 has increased significantly, supported by the latest three-month rainfall outlook and anticipated low processor throughput.

National average carcase weights in February averaged 294kg, 9kg up on 2019 levels. Heavier cattle came out of Queensland averaging 304kg cwt, up 9kg on year ago levels while New South Wales carcase weights lifted 8kg to 293kg. Victoria saw the biggest increase, gaining 16kg year-on-year to 283kg. The available feed has supported turnoff weights. Elevated cattle on feed numbers in the December 2019 quarter, have also had a positive impact on average carcase weights through the first quarter of 2020. Looking ahead, declining cattle on feed numbers and the impact on average carcase weights will likely be offset by greater feed availability, fewer cows and heifers in feedlots and higher entry weights.

Total beef production in February totalled 186,000 tonnes carcase weights (cwt), 11,000 tonnes cwt down on 2019 levels. The largest decline was seen in Queensland which declined 14,000 tonnes cwt to 81,000 tonnes cwt year-on-year. Production in New South Wales and Victoria remained steady on year ago levels, at 42,900 and 42,500 tonnes cwt, respectively. As the year progresses, the availability of finished cattle is expected to tighten, underpinning declining beef production. However, the bigger picture provides some optimism for the nation’s producers, as the cattle herd changes course from contraction to rebuild.

© Meat & Livestock Australia Limited, 2020