MLA cattle projections report: Herd rebuild slower than expected
Meat and Livestock Australia’s latest cattle projections report predicts the national herd rebuild will take longer than expected despite strong results at sales recently.
A NATIONAL herd rebuild following years of drought may not yet gain momentum until later this year, despite strong restocker action at saleyards in recent months.
That is the view of Meat and Livestock Australia, which is forecasting a drop in adult cattle slaughter levels this year in its latest cattle projections report.
The report says livestock supply will contract this year, with total adult slaughter to drop to seven million, a 17 per cent fall on this time last year.
And the start of a national herd rebuild is anticipated to occur closer towards the end of this year, due to sustained high female slaughter rates and strong levels of live exports.
MLA analyst Adam Cheetham said while a national herd rebuild was gathering pace, a serious rebuild could be delayed until the later half of the year.
“Looking at the Australian Bureau of Statistics data for the year to May, we still had high levels of female turn-off,” Mr Cheetham said.
“We’re someway off the 47 per cent benchmark (that signals restocking) … in May that level was at 55 per cent. And the rolling average for 12 months is about 55 per cent.”
Mr Cheetham said general sentiment among producers was that of optimism, with an incentive to rebuild herds.
“But the data points to that taking place more towards the end of the year,” he said.
“There’s definitely confidence, and you are seeing producers restock at a younger cattle level.”
The report forecast the national herd to rise 1.9 per cent to 25 million by next June.
National beef production was forecast to decline 14 per cent to 2.06 million tonnes carcass weight.
Mr Cheetham said rising carcass weights could offset the slaughter decline.
“The carcass weight story is one positive. It’s certainly helping support beef production,” Mr Cheetham said.
“Weights have increased pretty substantially, an increase of about 4 per cent.”
Producers such as Wilmot Cattle Co general manager Stuart Austin are feeling bullish about the price outlook, given the slow herd rebuild. He said elevated prices could become the “new normal”.
“There’s talk of an 850c/kg EYCI, and I think that’s quite likely,” Mr Austin said, but he conceded the COVID-19 pandemic could continue to throw the industry curve balls.
Despite these numbers, ongoing COVID-19 volatility is expected to dampening cattle prices.
MORE
STRONG PRICES DEFY SMALL SUPPLY
Biden win lifts hopes for Aussie red-meat exports
Will a change in US presidency affect Australia’s relations with China? The red meat industry could benefit from Biden’s win, as tensions with China increase. Here’s what we know.
Northern state drives cattle price gains
Queenslanders are paying up to 100c/kg more for young cattle than what Victorian producers are handing out, as the northern wet season looms. How far this factor will push prices is in question.