Good signs ahead for national herd rebuild

A bullish cattle market, positive weather outlook and falling slaughter rates have lifted the prospects of a national herd rebuild after fears it could fall to its lowest levels in almost 30 years.

Meat and Livestock Australia senior market analyst Adam Cheetham has flagged a rebuild is on the horizon, with cattle producers to restock after the end of the Eastern States’ drought.

Mr Cheetham said the outlook was optimistic for the country’s beef producers, as the cattle herd changed course from contraction to rebuild.

“With a renewed sense of optimism in the cattle market, the prospect of the national herd entering an expansion phase has emerged,” he said.

“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.”

MLA’s cattle projections for 2020, released in February, initially tipped the herd to decline 5.8 per cent to 24.7 million head by June 30 — its lowest level since 1992.

It would have marked a cumulative fall of 12.4 per cent since June 2018 in the wake of widespread destocking as drought hampered the Eastern States.

However, Mr Cheetham said declining slaughter nationwide could cause the forecast to be revised.

Mr Cheetham said the female portion of total slaughter reached 52 per cent in February, which was the lowest female cattle slaughter rate since January last year.

“In March, the National Livestock Reporting Service reported an 18 per cent decline for Eastern States cattle slaughter compared to 2019 levels, as producers held back cattle,” he said.

“The latest ABS production and slaughter data in February also started to show some promising trends.

“March ABS data will likely show a much greater drop in slaughter compared to year-ago levels, given the rain continued to fall.”

Mr Cheetham said female cattle slaughter would have to fall further to ensure herd numbers tracked upwards.

“On a 12-month rolling average basis, it will take time to achieve the 47 per cent required to signal the national herd is expanding, given the extent of breeding stock turn-off in 2019,” he said.

“However, the prospect of this now occurring at some stage in 2020 has increased significantly, supported by the latest three-month rainfall outlook and an-ticipated low processor throughput.”