Meat and Live­stock Aus­tralia has re­leased its lat­est quar­terly up­date, which pre­dicts a soft­en­ing mar­ket

North East & Goulburn Murray Farmer - - FRONT PAGE -

MEAT and Live­stock Aus­tralia has re­leased its quar­terly pre­dic­tion for the cat­tle mar­ket, and not sur­pris­ingly has pegged the mar­ket as one that will con­tinue to soften.

A poor July to Septem­ber rain­fall outlook for south­ern Aus­tralia - fol­low­ing the dry au­tumn – along with a 20-year low cow and heifer slaugh­ter rate and con­tin­ued volatile global mar­ket ac­tiv­ity have re­sulted in a mar­ket pro­jec­tion that is weaker than first thought.

The slowly build­ing na­tional cat­tle herd in­di­cates the peak of the cat­tle price is likely now be­hind pro­duc­ers, and down­ward pres­sure will con­tinue to slowly mount for the fore­see­able fu­ture.

De­spite this, Aus­tralian cat­tle prices are un­likely to drop back to pre-2013 lev­els, buoyed by some lin­ger­ing re-stocker ac­tiv­ity when pas­ture con­di­tions even­tu­ally im­prove.

In­ter­est­ingly, June 2017 marked a cross­roads for the Aus­tralian beef in­dus­try.

Eastern states’ slaugh­ter con­sis­tently tracked higher than year-ago lev­els for the first time in three years, while at the same time, cat­tle prices dropped be­low year-ago lev­els, also for the first time in three years.

These trends are likely to re­main in place for the re­main­der of 2017, and have a sig­nif­i­cant im­pact on price and pro­duc­tion ex­pec­ta­tions.

More specif­i­cally, cat­tle on feed re­main at record high lev­els, with num­bers across Aus­tralia in the March quar­ter in ex­cess of one mil­lion head.

Con­tribut­ing to the record high is a slower than usual turnoff rate - cat­tle be­ing re­tained on feed for longer.

Dur­ing the March quar­ter, the pro­por­tion of cat­tle mar­keted rel­a­tive to the num­ber on feed was 69 per cent, com­pared to the quar­terly av­er­age of 75 per cent over the past three years.

This is a con­tin­u­a­tion of a trend that be­gan in 2016, and is one that is likely to hold for the sec­ond half of 2017, and into 2018.

This should re­sult in rel­a­tively strong feeder cat­tle buyer ac­tiv­ity and rea­son­ably high av­er­age car­case weights, even when fe­male cat­tle slaugh­ter is an­tic­i­pated to re­turn to more typ­i­cal lev­els in 2018.

Slaugh­ter num­bers con­tinue to con­firm that re-stock­ing seems to be pro­duc­ers’ main goal for the com­ing year.

Aus­tralian fe­male cat­tle slaugh­ter for the year-to-April high­lights not only the in­tent many pro­duc­ers have to re­plen­ish de­pleted herds, but also just how few cows and heifers ex­ist na­tion­ally in the wake of sev­eral years of drought liq­ui­da­tion.

After four months of 2017, fe­male cat­tle slaugh­ter was just 973,000 head – the low­est since 1995 and rep­re­sent­ing 45 per cent of the over­all adult kill, three per­cent­age points be­low the 10-year av­er­age (48 per cent).

De­spite pas­ture con­di­tions de­te­ri­o­rat­ing in some re­gions, and the poor rain­fall outlook, ex­pec­ta­tions are for the fe­male com­po­nent of the cat­tle kill to re­main be­low the 10-year av­er­age, sim­ply due to lim­ited avail­abil­ity and al­ready rel­a­tively low stock­ing rates.

The adult cat­tle kill was 13 per cent be­low 2016 lev­els, at 2.16 mil­lion head, after the first four months of the year (low­est since 1995).

How­ever, num­bers pro­cessed across the eastern states re­cov­ered in June and are an­tic­i­pated to re­main above year­ago lev­els for the rest of 2017.

A sig­nif­i­cant con­se­quence of the low fe­male cat­tle slaugh­ter, com­bined with high num­bers of cat­tle on feed, is that av­er­age car­case weights for the yearto-date were 296.3kg/head – a stag­ger­ing 7.8kg (3 per cent) in­crease on the pre­vi­ous record set in 2012.

While low fe­male cat­tle slaugh­ter was a sim­i­lar­ity be­tween the two pe­ri­ods, pas­ture con­di­tions were con­sid­er­ably bet­ter in 2012.

This meant that in 2012, the bulk of the weight was un­der­pinned by heavy grass-fed cat­tle, as op­posed to a greater pro­por­tion of grain fin­ished beef this time.

Car­case weights are an­tic­i­pated to re­duce slightly as the year pro­gresses, but stay above the long-term av­er­age for the re­main­der of 2017.

As a re­sult of the in­crease in cat­tle slaugh­ter, com­bined with heav­ier car­case weights, 2017 beef and veal pro­duc­tion is now es­ti­mated to be 2.17 mil­lion tonnes cwt, up 2 per cent year-on-year.

South Devon - An­gus first cross bull Aus­tralis cow

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