AUSTRALIA’S epic drought is shrinking beef production with the national cattle herd expected to fall to its lowest levels since the mid-1990s.
Meat and Livestock Australia predicts the national beef herd will drop 3.7 per cent to 26.2 million head by mid-year, in the process pushing down beef production and exports at a time when strong demand from Asia is set to continue and competition is growing.
Cattle slaughter is forecast to drop three per cent to 7.6 million head this year and beef production by four per cent, to 2.2 million tonnes carcase weight.
MLA market intelligence manager Scott Tolmie says drought conditions across New South Wales and south-west Queensland have undone much of the herd rebuild achieved since the 2013-2015 drought.
“A significant turnaround in conditions is needed before rebuilding can recommence,” Tolmie says.
“The prospect of another below average northern wet season and a largely negative three-month rainfall outlook will likely mean many producers that retained stock in 2018 will continue or commence destocking in the months ahead.
Carcase weights are expected to drop to an average 289 kg a head this year as the female kill remains elevated and the ability and cost to finish cattle remains challenging.
Tolmie says any further destocking will see downward pressure on cattle prices, particularly for store condition cattle.
“Finished cattle will likely remain supported to some degree, given the tight supply of quality slaughter cattle and strong demand fundamentals in many markets,” he says.
“Seasonal conditions will most likely have the strongest impact on domestic cattle prices, however, exchange rates, production in the United States and South America, market access developments and demand from China will all play an important part.”
Australian beef exports ended 2018 at 1.13 million tonnes, the third largest year on record and the sixth consecutive year exceeding one million tonnes.
Japan, the US and South Korea were the three largest markets. However, China recorded the strongest growth, up 48 peer cent year-on-year to 163,000 tonnes.