Herd rebuild tipped to grow at expense of production
The latest industry projections expect national cattle numbers to grow rapidly to 26 million this year.
As recent months have shown, the cattle market in Australia is riding high on two key elements — supply and weather.
Both are changing, and as they are so intricately linked to price, the value of cattle will shift as well.
In the short-term, rainfall is likely to have the biggest influence on weekly to monthly price fluctuations as the dry weather starts to bite.
However, stored hay and grain, and low stock numbers on many northern properties, will continue to provide some protection against dramatic market corrections.
As an example, a recent analysis of herd dynamics suggested the state of NSW remains something of black hole in regard to cattle numbers, with a lot of country still to fill.
However, in its latest industry projections, Meat and Livestock has crunched some numbers around Australia’s herd rebuild and anticipated slaughter rates out to the year 2023.
The standout point is how quickly the herd is expected to rebound, with MLA tipping Australia’s herd size will reach 26 million by the end of this year.
That is 4 per cent higher than what MLA originally forecast for herd size just a few months ago in February.
The estimate is based on slowing slaughter numbers following the downpours across Queensland and parts of NSW earlier this year.
The scenario painted by MLA is that northern farmers have leapt into herd rebuilding following the big break in seasonal conditions (which is why the EYCI was able to reach a record 900c/kg carcass weight plus recently), and numbers will grow at the expense of production this year.
MLA has downgraded its forecast for Australia’s cattle kill this year, down to 6.4 million head from an original forecast made earlier this year for a total slaughter of 6.9 million.
If it plays out like that, it could be a case of short-term pain for processors this year before the market starts to free up from next year.
The graphs show the predicted herd recovery and associated slaughter rates for coming seasons, as forecast by MLA.
It is worth noting that variables such as season, exchange rates, world events and politics can shatter even the best crystal ball gazing.
By 2023 Australia’s herd size is forecast to be back to 2017 levels.
And by that year, Australia’s cattle slaughter levels are forecast to be back to 2016 levels.
NSW REMAINS WELL BEHIND ON NUMBERS
The state of NSW is still something of a black hole when it comes to cattle numbers despite some producers spending up big on herd rebuilds in the past year.
Modelling by Tim McRae, chief economist for AuctionsPlus market insights, found the NSW cattle herd to still be shy of four million head.
The figure AuctionsPlus came up with was an estimated herd of 3.98 million head across NSW, up slightly from the 3.7 million estimated in June 2020, but still 25 per cent below the state’s most recent peak of 5.3 million head in 2017.
Mr McRae said analysis of buying and selling trends using AuctionsPlus data had found restocking across NSW had been like a jigsaw puzzle: some areas had their stock in place while there were obvious gaps in other regions.
“Growth in the NSW herd over the past 12 months has been initially slow, geographically uneven and for some producers very expensive,’’ he said.
“It appears that the NSW herd still has a very long way to go before it reaches the 2017 level of 5.3 million head, and even further if the 30-year average of 5.78 million head is to be challenged.’’
The AuctionsPlus market insights team did break down the estimated NSW herd by region.
It found the Murray and Riverina areas had the most stable cattle numbers, while volumes of cattle had yet to find their way back into the pastoral country in the north-west.
The following are their estimates of the current NSW herd size by region, compared with June 2017 levels:
NORTHWEST NSW at 540,000 cattle, still down 358,000 head on 2017 levels.
RIVERINA 536,500 head, down 28,500.
CENTRAL West 480,000, down 218,000.
NORTHERN Tablelands 470,000, down 215,000.
MURRAY 425,000, down 25,000.
SOUTHEAST NSW 393,000, down 30,000.
NORTH Coast 355,000, down 22,000.
CENTRAL Tablelands 342,000, down 140,000.
HUNTER 333,000, still down 170,000.
WESTERN (Lower Murray Darling) 85,000, down 107,000.
GREATER Sydney 24,000, down 6000.
Mr McRae said they had also traced NSW’s historical herd population and in 1976 numbers were estimated to have reached an all-time high of 9.14 million head.
This was when an extended cattle market slump resulted in producers holding on to stock, and at the time Australia was believed to have a record herd of 31.8 million.
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