Usually, cattle market analysts read data in similar ways. At the moment there are a couple of different schools of thought in terms of where the herd is headed, and what this means for pricing. Here we take a look at the differences and delve a bit deeper into some data.
The latest Australian Bureau of Statistics (ABS) data showing cattle slaughter saw total cattle slaughter ease on September peaks, but it was 16% above the same quarter in 2023. The question is whether the lift in slaughter is due to normal turnoff rates from a larger herd, or whether we are in a herd liquidation phase.
The bullish analysts are suggesting the fact that 51% of cattle being slaughtered are female points towards a herd liquidation, with subsequent weaker cattle supply seeing prices rise. There is little doubt that weaker cattle supply will result in higher prices, given current strong export prices and tight US beef supplies.
The other opinion is not so much bearish, but more looking at steady pricing, as the large herd is replacing itself with improvements in marking rates and productivity, seeing more females available for slaughter.
Breaking down female slaughter rates (FSR) by state gives a guide to herd intentions in the south and the north. Figure 1 shows the Queensland FSR was 39% in December, up from 37.5% in December 2023. Not a huge increase. The main drivers of the higher national FSR are Victoria and NSW.
We know Victoria and NSW have had tough seasons, but it’s interesting to look at the make up of the southern herd, if we are trying to get an idea of where the beef herd is headed. Figure 2 shows the latest (from way back in 2023) ABS data on the cattle herd.
Over half of Australia’s beef cow herd is in Queensland and the Northern Territory, where the data suggests the herd might be steadying. In Victoria, where the FSR is high, almost half of the cows are of the dairy variety. Beef cow slaughter might be higher, but as a proportion of the national herd it is of lower significance.
In NSW the beef herd is likely to be shrinking, and this will have some impact on the national herd, but it’s hard to make a case for national herd declines in the order of 4-6% we saw in 2019-20.
What does it mean?
The southern cattle herd is likely in decline, which will bolster prices there, but strong numbers and beef supply out of the north could keep a lid on prices. The prospect of poor rainfall in the north should be in the back of all cattle producers’ minds. A large herd and forced turnoff are the worst case scenario for pricing.
Key Points
- Strong female slaughter rates point towards a shrinking herd.
- The largest cattle state, Queensland, has had a smaller increase in the FSR.
- The southern cattle herd is shrinking, but in the north the herd might be steady.
Click on figure to expand
Click on figure to expand
Data sources: MLA, ABS, Mecardo
