Southern states driving cattle slaughter levels up

Southern states driving cattle slaughter levels up


Beef
Figure 1: In Victoria, year to date slaughter has only been higher in the drought years of 2014 and 2015.

Figure 1: In Victoria, year to date slaughter has only been higher in the drought years of 2014 and 2015.

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Cattle slaughter has been running ahead of year earlier levels for the best part of two years

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CATTLE slaughter has been running ahead of year earlier levels for the best part of two years. While that trend has continued into winter, the driving states have changed somewhat.

Normally, during dry times, and especially in winter, cattle slaughter is driven by Queensland and New South Wales. While the two northern states are still the largest slaughter states, it has been Victoria and South Australia which have been killing more cattle in recent times. Victorian slaughter is up 8.5 per cent year to date compared to the same period last year (Figure 1).

The situation in South Australia is a little different. The closure of the Murray Bridge works in January 2018 has SA year to date slaughter running 24pc below the five year average, but it has picked up this year. SA slaughter for the year to date is up 16pc on last year, showing some capacity is returning.

There has been a rapid rise in Victorian and SA cattle on feed over the last year (Figure 2). The extra cattle on feed equates to around 2,000 head per week over a quarter, so it doesn't account for all the rise in slaughter. Victoria and SA slaughter has been averaging 5000-6000 head more for the year to date.

Figure 2: Combined numbers of cattle on feed in March were 26pc higher than March 2018, which equates to nearly 25,000 head.

Figure 2: Combined numbers of cattle on feed in March were 26pc higher than March 2018, which equates to nearly 25,000 head.

What does this mean?

Increased feedlot supplies are propping up southern cattle slaughter to an extent, but it appears there is still some herd liquidation going on in the south. There is plenty of anecdotal evidence of dairy herds making their way to works with the tough summer and autumn, and high feed costs squeezing margins.

There has been similar pressure on beef herds, and this is likely to have helped lift slaughter. We often say stronger cattle slaughter is good news for prices down the track. In this case, the theory holds.

  • Angus Brown, Mecardo

The story Southern states driving cattle slaughter levels up first appeared on Farm Online.

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