The latest data release from the Australian Bureau of Statistics on livestock products has shown that our beef cattle herd is well and truly into destocking mode. Figures lifted across the board, with slaughter now outpacing the rapid turnoff caused by seasonal conditions in 2018-19, and the female slaughter rate (FSR) has now been at or above the recognised 47% destocking figure for six consecutive quarters.
The latest figures, released last week for
the July to September period, reinforce that strong herd numbers are driving
the current trends, rather than any one particular seasonal or market
conditions.
There were 2.24 million head of cattle
slaughtered in the September quarter, making it the highest volume since the
same quarter in 2015. This was a 17% increase year-on-year, 6% higher than the
previous quarter, and 24% above the five-year average for the September period.
If we look at it from the year-to-date perspective, the cattle kill is 16%
higher for the first three quarters of 2024 than it was in 2023. However, in
comparison to the last time quarterly slaughter was this high, being 2015,
year-to-date kill is sitting about 1.5% lower so far. It is also sitting below
the figure for the first three quarters of 2019, the last true destocking year.
While slaughter didn’t break records last
quarter, production and gross value did. Interestingly enough, doing so without
carcase weights reaching record highs seen from 2021 to 2023 either. Increases
in production did replicate slaughter however, being up 17% year-on-year for
the quarter and 7% stronger than the June period. The 690,694 tonnes of beef
produced from July to September wasn’t enough to bring year-to-date production
up to 2014-15 levels, but it did see the gross value of cattle slaughtered hit
a record high for any quarter of $4.25 billion.
Along with slaughter mimicking other major
destocking years, the FSR is also indicating the cattle herd has reached its
peak capacity and is now in a turn-off phase. The FSR for September was 52%, a
slight dip of just over 1% from the previous quarter – with June traditionally
being the strongest female slaughter quarter – but above the five-year average
of 49%, and the recognised destocking rate of 47%. It has now been at or above
the figure since June 2023 and brings the average for the year so far to 51%.
The five-year annual average is 49%. In real terms, because of the elevated
total slaughter, the 1.16 million females killed last quarter was the most
processed since December 2019.
What does it mean?
Consistently strong slaughter and especially production is putting a cap on young cattle prices, as there is obviously plenty of supply, both headed to the processors and already in the paddock. The National Young Cattle Indicator remains below both five and 10-year average levels currently but keeping in mind it is still at its fourth highest level on record for this time of year in the face of historically high numbers.
The most positive price indicator given the above is the national processor cow, which is showing plenty of resilience despite the FSR, sitting above the 10-year average and more than 40% higher than the same time last year. The demand for both categories bodes well to limit the downward pressure on returns as the destocking continues.
Key Points
- Cattle slaughter rose again in the September quarter as the herd continues to move further into destocking mode.
- Female slaughter rate fell slightly from the previous quarter but remains well above the five-year average.
- Both beef production and the gross value of cattle slaughtered reached record highs.
Click on figure to expand
Click on figure to expand
Data sources: MLA, Mecardo
