Cattle herd rebuild to continue as slaughter rates fall: Meat and Livestock Australia

The national cattle herd rebuild is set to continue on the back of lower slaughter volumes and ongoing strong seasons in key cattle-producing regions, according to Meat and Livestock Australia’s latest projections.

MLA analysts have pegged the herd to increase by 5.6 per cent to 27.6 million head this year, after drought-induced destocking saw it plummet to a record low 24.6m in 2020.

MLA’s June Cattle Projections report, released on Friday, has revised slaughter numbers down to 6.15m head in 2022, which will further drive the rebuild.

“The severity of the 2017-2019 drought decimated the herd to its lowest level since the 1990s, therefore the rebuild was starting from an extremely low base,” the report stated.

“Destocking occurred to such an extent that there is still capacity on many farms to increase their stocking rates, even after three years of sustained rainfall.

“These factors are contributing to producers retaining more stock and withholding it from slaughter.”

Supply chain issues were another driver of decreasing slaughter numbers, as was an ongoing processor backlog caused by a major worker shortage exacerbated by COVID-19.

However, MLA analysts were hopeful the labour shortage would ease slightly throughout 2022 with the opening of borders and new visas being issued.

Despite recent challenges, MLA market information manager Stephen Bignell said the industry had demonstrated resilience in processor capacity domestically, and global demand for Australian beef remained high.

“Supply and demand for Australian beef is forecasted to increase as we strengthen our position in emerging international markets such as Indonesia and Thailand,” he said.

“An increasingly efficient and dynamic export market and resilient supply chain will mean that the Australian beef industry is well placed to capture opportunities as slaughter and production ramps up.”

By 2024, Australia’s herd was expected to grow a further 4.6 per cent to reach 28.9 million head.

The pace of the rebuild was forecast to plateau that same year, with the number of breeders expected to recover to pre-drought levels in 2023.

“Southern Australia will continue to drive the national herd growth with persistent, substantial rainfall in the southern cattle regions of Queensland, NSW and Victoria,” Mr Bignell said.

“For northern Australia, they will require an above-average wet season in order to turbocharge their rebuild following a disappointing 2021-22 wet season.”

As the herd matured from rebuilding, many young females were expected to come into calf for their first or second joining.

Favourable reproductive conditions and higher-than-average joining and branding percentages were also forecast.

“Southern Australia are driving the higher prices in the market and the strong demand for young heifers,” Mr Bignell said.

“Meanwhile, the northern systems have seen a lower-than-average wet season, with mustering starting earlier than usual.”

There had been a gradual easing in the La Nina According to the Bureau of Meteorology, which has predicted a return to a neutral phase by early winter.

“In this neutral stage, trade winds push warm surface water west building up in the north of Australia to increase rainfall in these areas,” the report said.

“Despite the El Nino-Southern Oscillation transitioning to a neutral phase, BOM have forecast above-average rainfall for majority of the nation, including for NSW, Victoria and SA.

“Meanwhile, areas of WA and Tasmania are predicted to have average rainfall between June and August.

“The reliance of northern Australia on summer rainfall may reduce the effectiveness of the above-average winter rain that is forecast.”

Record carcase weights were expected to offset lower slaughter volumes, with beef production forecast to rise by 4.5 per cent to 1.97m tonnes this year.

Carcase weights in the first quarter of 2022 reached a national average of 324.4kg per head — 10.8kg higher than the last year’s average — due to good seasonal conditions across Australia.

“After an easing of slaughter rates, carcase weights have subsequently increased,” Mr Bignell said.

“This enables production to be maintained at a high rate.

“In addition, large volumes of cattle in feedlots are driving the higher carcase weights along with higher prices, which are incentivising producers to increase weights before selling.”

Carcase weights were forecast to remain high in 2024, with large numbers of cattle on feed and prices strong.

Strong seasonal conditions would allow feed to remain abundant though increasing grain prices could put pressure on feedlot systems, according to MLA.