Cattle herd heading towards 23 year low in 2019

Cattle herd heading towards 23 year low in 2019


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FIGURE 1: The last update of 2018 had the 2019 herd at 27.95 million head, having seen some growth. However, the latest forecast herd figure is down 6.7pc as females have kept coming for slaughter and dry weather is hampering marking rates.

FIGURE 1: The last update of 2018 had the 2019 herd at 27.95 million head, having seen some growth. However, the latest forecast herd figure is down 6.7pc as females have kept coming for slaughter and dry weather is hampering marking rates.

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Mecardo analyst Angus Brown

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MEAT and Livestock Australia’s (MLA) cattle industry projections for 2019 were released and there were few surprises.

With cattle slaughter rates higher than expected, the herd has been cut, with impacts for cattle supply in the short and medium term.

High cattle slaughter rates and in particular strong female slaughter rates have been occurring for much of the last 9 months. MLA has taken the high slaughter as a herd liquidation.  

After increasing 5 per cent in 2017, the Australian cattle herd fell 2.6pc in 2018 and is slated for a further 3.8pc fall to June this year.

The consecutive falls, following so soon after the liquidation in 2014 and 2015, is expected to put the Australian cattle herd at a level not seen since 1997.

The dry summer in NSW and Southern Queensland has seen a large adjustment to the herd in MLA’s projections, down 6.7pc.

With a lower herd, we have to get lower slaughter. MLA is projecting the low in slaughter rates to come in 2020, as the lack of summer rain sees strong slaughter rates continue for some time yet.

However, slaughter is expected to fall 3.5pc in 2019 and a further 3.3pc in 2020.  

FIGURE 2: Australian cattle slaughter estimates. Interestingly, MLA doesn’t expect slaughter to fall to the levels seen in 2016 and 2017.  The extreme low slaughter in those years was helped by bumper seasons and resulted in herd growth of 4pc in 2017.

FIGURE 2: Australian cattle slaughter estimates. Interestingly, MLA doesn’t expect slaughter to fall to the levels seen in 2016 and 2017. The extreme low slaughter in those years was helped by bumper seasons and resulted in herd growth of 4pc in 2017.

It’s hard to see the herd achieving the forecast growth rates of 3pc and 2.6pc in 2021 and 2022 without a stronger decline in slaughter.

What does it mean?

An over 20 year low in the herd and associated tight cattle supply obviously means prices are in for a boost.

Just how much of a boost will be governed by weather.

There is upside potential for finished cattle, store and breeding cattle.

The story Cattle herd heading towards 23 year low in 2019 first appeared on Farm Online.

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