Beef exports update
ONGOING drought and a poor rainfall outlook have seen 2018 Australian beef production forecast to finish 6 per cent up on 2017 at 2.3 million tonnes carcase weight, according to Meat and Livestock Australia’s Cattle Industry Projections October update. Elevated levels of adult cattle slaughter throughout winter and early spring has driven the increase, with Australia’s national adult cattle slaughter for 2018 forecast to reach 7.8 million head, 9 per cent higher than 2017.
MLA’s market intelligence manager, Scott Tolmie, said while October brought useful – though not drought-breaking – rain to parts of the eastern states and restored some confidence to the store cattle market, widespread follow-up rain was needed for any lasting benefit to pastures and crops.
“Despite poor prospects for pastures entering into 2019, slaughter numbers will begin to be constrained by a shrinking pool of available cattle,” Mr Tolmie said.
“The female slaughter rate has risen to levels not seen since the last drought in 2015, though notably, this time off a lower base herd, which will have repercussions for cattle supply and production in coming years.
“Typically, the Australian cattle herd contracts when the proportion of female slaughter exceeds 47 per cent of total slaughter – a threshold first surpassed in May and the female contribution to the kill has increased since.
“The high percentage of females contributing to slaughter continues to put pressure on national average carcase weights. Projected national carcase weights have now been revised downwards, to 290kg/head for 2018.”
Mr Tolmie said the start of the northern wet season marked a pivotal time, especially this year.
“In 2018, the Eastern Young Cattle Indicator has traded at a discount to the finished market since April, as worsening seasonal conditions deter restocker buyers,” Mr Tolmie said.
“More recently, rainfall in some key eastern production regions saw the EYCI break through the 510c/kg carcase weight mark on October 17. Looking forward, follow-up rain could see demand for young cattle spike, particularly females.
“However, the continuation of dry conditions or just one-off rainfall events would likely see another wave of
destocking, especially in the north, placing further downward pressure on prices.”
Mr Tolmie said finished cattle prices strengthened in the September quarter, supported by solid export
“Increased beef production, a softer Australian dollar and robust demand fundamentals, particularly in established Asian markets, has underpinned a 9 per cent increase in forecast beef exports in 2018, to 1.1 million tonnes shipped weight.
“Despite increasing global competition, beef exports for the calendar year to September grew 12 per cent year on year, to 840,500 tonnes swt. On the back of record grain-fed cattle turnoff, exports to Japan and Korea have recorded increases of 7 per cent and 15 per cent, respectively.
“Exports to China in the first nine months of 2018 surged 55 per cent year on year, while shipments to the United States were slightly down.”
BEEF OUTLOOK: Slaughter numbers in 2019 will be constrained by the shrinking pool of cattle, says Meat and Livestock Australia’s market intelligence manager Scott Tolmie.