Beef's good run to slow

Easing: The strong demand for beef could soften in the remainder of this year with production on the rise, according to Meat & Livestock Australia.
Easing: The strong demand for beef could soften in the remainder of this year with production on the rise, according to Meat & Livestock Australia.

The brakes could be coming on the Australian beef industry’s excellent run with cattle prices now lower than year-ago levels and production on the rise, Meat & Livestock Australia (MLA) says.

This is one of a number of revisions to 2017 projections in the MLA’s mid-year cattle industry update, made as a result of a poor July-to-September rainfall outlook for southern Australia following the dry autumn, a 20-year low female slaughter and volatile global market activity.

MLA’s market information manager Ben Thomas said the turning point for Australian beef came in June when eastern states’ slaughter consistently tracked higher than year-ago levels for the first time since 2014, while at the same time cattle prices dropped below year-ago levels, also for the first time in three years.

“These trends are likely to remain in place for the remainder of 2017 and have a significant impact on price and production expectations,” Mr Thomas said.

“It has been a good run for prices – for three years producers selling at the same time each year have received more for their cattle than the year before. That’s now changed, though we’ll remain well above that five-year average for the foreseeable future,” he said.

Mr Thomas said Australian cattle prices were unlikely to drop back to pre-2013 levels, given continuing restocker activity as pasture conditions improved, an Australian dollar that was unlikely to strengthen and reducing tariff regimes into Japan, Korea and China.

Mr Thomas said record low female cattle slaughter due to the ongoing national herd re-build had impacted on many parts of the industry.

“After the first four months of 2017, female cattle slaughter was just 973,000 head – the lowest since 1995 and representing 45 per cent of the overall adult kill, three percentage points below the 10-year average of 48 per cent.

“The adult cattle kill was 13 per cent below 2016 levels at 2.16 million head after the first four months of the year, also the lowest since 1995. However, numbers processed across the eastern states recovered in June and are anticipated to remain above year-ago levels for the rest of 2017.

“A significant consequence of the low female cattle slaughter, combined with record high numbers of cattle on feed is that average carcase weights for the year-to-date were 296.3 kilogram a head – a staggering 7.8kg ,or three per cent, increase on the previous record set in 2012,” Mr Thomas said.

He said the forecast two per cent year-on-year rise in Australian beef production for 2017 should match this year’s exports to the 1.02 million tonnes exported in 2016, the fifth consecutive year above one million tonnes exported.