Australia’s livestock sector is forecast to increase to $33.4 billion value in 2021-22, up 8 per cent year-on-year due to an increase in prices for most meat and livestock products. The latest outlook report from the Australian Bureau of Agricultural and Resource Economics and Sciences revealed global demand for livestock products would increase as countries continued to reopen. Consumers with more disposable income and greater confidence are expected to splash out on meat products in 2022. The report said favourable seasonal conditions throughout 2021 were expected to continue early next year, supporting the production of wool and dairy products and the rebuilding of cattle herds and sheep flocks. Beef, lamb and mutton production are forecast to increase, but lamb and mutton increasingly more than beef. Record high cattle prices are expected to continue, providing incentives for farmers to retain cattle for longer and maximise weight gains before sale. The gross value of production of cattle and sheep slaughtered is also pegged to increase due to high global meat prices, strong domestic prices driven by restocking demand, and modest production increases. The value of cattle slaughtered is forecast to rise by 16 per cent to nearly $15 billion, and the value of sheep and lambs slaughtered is also expected to rise by 16 per cent to $4.9 billion. Average saleyard prices are forecast to increase by more than 11 per cent for cattle and 8 per cent for lambs in 2021–22. Global prices for beef and sheep meat are forecast to increase as global demand recovers alongside tight meat supplies. US meat prices have risen significantly during the last 12 months, resulting in higher lamb exports to the US and higher Australian lamb prices. But Australia’s low beef production will limit its ability to capitalise on this export opportunity, with beef export volumes forecast to increase by 5 per cent and sheep meat export volumes by 9 per cent — well below 2019-20 levels. Chinese beef import prices are also likely to remain high. Additionally, the US Department of Agriculture has forecast China’s pork production to fall by almost 5 per cent from 2021 to 2022 due to the high price of inputs, notably feed grains. These factors, combined with expected increases in meat demand, will likely put upward pressure on Chinese meat prices. This will support Australian meat exports to China, especially mutton exports, which are particularly sensitive to Chinese demand. Australia’s lamb and mutton production is forecast to increase by 8 per cent to 680,000 tonnes in 2021–22, and beef production is expected to increase by almost 4 per cent to 2 million tonnes. Sheep slaughter is expected to increase by 13 per cent due to strong prices for marginal ewes that were kept on for an extra season. Lamb production is also forecast to increase as previous flock rebuilding brings more lambs to market. Beef herds are also rebuilding but forecast increases in the slaughter of cattle will not be as high as those for sheep. Cattle are expected to be held longer by producers to take advantage of pasture availability. Cattle slaughter numbers are expected to increase in the first half of 2022 as heavier cattle are brought to market. The easing and reopening of border restrictions may alleviate labour shortages for some meat processors, providing scope for production to increase. Live sheep exports have fallen in recent years, but they are expected to rise by 10 per cent to 662,000 head in 2021–22 due to stronger demand in the Middle East. Live cattle exports are expected to remain steady. Growth will be held back by the high prices of Australian cattle, stock availability and potential shipping issues. Demand for Australia’s dairy cattle is being driven by Chinese producers looking to serve a growing domestic dairy market by increasing the size and improving the genetics of their dairy herd. This means dairy cattle exporters are less exposed to the price and supply issues currently facing feeder and slaughter cattle exporters. Dairy cattle exports are forecast to be slightly lower in 2021–22 but remain historically high. The slowdown in the live cattle trade has seen several vessels servicing the Australia to South-East Asia trade redirected to other routes. Live exporter profit margins may also be affected by costs such as flights and quarantine associated with bringing support staff back to Australia. The gross value of milk production is forecast to rise by 7 per cent to $5 billion in 2021–22 due to higher prices and increased production volumes. The average farm-gate milk price is forecast to increase by 6.3 per cent to 56 cents per litre or $7.34/kg of milk solids in 2021–22.