Cattle supply to remain tight in 2018

08 Feb, 2018 04:00 AM

CATTLE supplies are likely to remain tight in 2018 with only a small increase expected in adult slaughter to 7.4 million head as the herd rebuild continues, according to Meat and Livestock Australia’s 2018 Cattle Industry Projections.

MLA’s market intelligence manager Scott Tolmie said the dry winter and spring across many parts of Australia saw a higher than expected turn-off in the second half of 2017, temporarily halting the herd rebuilding efforts of producers in affected areas.

“This has meant many young cattle were pushed into feedlots in 2017 due to lack of decent pasture - stock that otherwise would have been finished in the paddock and come to market in 2018,” Mr Tolmie said.

“This is part of the reason there is an expectation of tighter slaughter numbers than previously forecast in 2018, as these producers, particularly in Queensland, look to rekindle rebuilding efforts.

“If the three-month rainfall outlook from the Bureau of Meteorology comes to fruition for February to April, it is likely to see tight supplies in certain regions, particularly through the mid part of the year.”

Mr Tolmie said carcase weights are expected to ease back in line with long-term trends after a record year in 2017 when carcase weights averaged 298kg.

“An easing of carcase weights combined with a forecast increase in slaughter is expected to result in total beef production this year lifting one per cent to 2.17 million tonnes cwt,” Mr Tolmie said.

“That’s an increase on both 2016 and 2017 figures, but well down on the drought impacted levels of 2013-2015.

“Overall, the modest increase in slaughter is expected to more than outweigh the anticipated drop in carcase weights.”

Expectations are for a drop in the number of cattle on feed after a record year in 2017, which saw three consecutive quarters with over one million head on feed.

“A decline towards the 850,000 to 950,000 head mark is expected, driven by higher grain prices combined with a growing gap between feeder and grain finished cattle prices (cents/kg),” Mr Tolmie said.

“This is being underpinned by restockers continuing to pay premiums in the young cattle market and increased US competition in key grainfed export markets.”

Mr Tolmie said 2018 was shaping up as a challenging year for Australian beef exports, with expected increases in production and exports from many major competitors, including the US and Brazil.

“Australian beef exports will be competing in a global market with a very strong supply of beef.

“With the increased supply, global beef prices should come under pressure, reinforcing the need for Australia to continually position itself as a superior supplier of high quality product,” Mr Tolmie said.

“Australian beef exports are expected to slightly increase to 1.04 million tonnes shipped weight in 2018, in line with growing production.

“Although this increase is not much on 2017 and is down on 2013-2015 levels, it will still be bigger than any year prior to 2013.”

Mr Tolmie said cattle prices are likely to come under pressure in 2018 as international competition intensifies and supply increases.

“Restocker interest throughout the year will be a key driver of the Eastern Young Cattle Indicator (EYCI),” Mr Tolmie said.

“The rally we saw in October/November 2017, due to some good rainfall across Queensland and NSW, demonstrated restocker intent given the right conditions.”



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