Mixed young southern cattle

As the herd rebuild has taken hold, cattle slaughter has slumped to extremely low levels in the first quarter of 2021. After such low numbers going through processors, Meat and Livestock Australia’s (MLA) annual forecast is looking like it might be on the high side.

For the year to date east coast cattle slaughter has taken an extraordinary dive.  Figure 1 shows the weekly slaughter numbers from MLA, with a 27% year-on-year decline taking weekly slaughter to levels not consistently seen since the 80s.

The public holiday in some states last week saw slaughter dip lower, it should recover somewhat, but 100,000 head per week seems to be about the limit at the moment.

The fall in cattle slaughter has been pretty general across the east coast.  Victoria has had the strongest decline, down 31%, while the largest slaughter state, Queensland, is down 28%. NSW fell 26%.  Both northern and southern zones have been afflicted by tighter supply of slaughter cattle.

Back in February MLA released their forecast for cattle slaughter for 2021.  MLA pegged slaughter at 6.9 million head, down 2.6% on 2020.  If slaughter has spent the first quarter 27% lower than last year, how does that mean the annual rates are going to pan out?

In figure 2 we have taken the MLA forecast of 6.9 million head, deducted our estimate for January to March slaughter, which is based on weekly data.  Then we applied average seasonality to the remaining slaughter months.

Figure 2 suggests, that if we are going to hit the 6.9 million head of slaughter by the end of the year, we’ll have to see a year-on-year increase from May to December.  In fact, for the rest of the year cattle slaughter will have to be 5% higher than the same time last year.

Cattle slaughter won’t have to be as high as the five-year average, but if we are to see the slaughter levels predicted, it’s going to have to pick up from the first quarter.

What does it mean?

It is more likely that we’ll see cattle slaughter lower than the 6.9 million head predicted, rather than see a 5% increase for the rest of the year.  If slaughter stays at around the 100,000 head per week level it’s been at for the first quarter, cattle slaughter could come in as low as 6 million head, a level not seen since 1985.

It’s hard to see cattle slaughter getting any lower, and as such continued lower levels are unlikely to see prices get any stronger.  If slaughter does start to rise, prices are likely to do the opposite.

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • First-quarter cattle slaughter has been extremely low, down 27% on last year.
  • Slaughter rates have been much lower than needed to hit MLA’s annual target.
  • It looks like cattle slaughter will be lower than even the weak forecasts from February.

Click to expand

Click to expand

Data sources: MLA, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
USA texas longhorn

US herd build provides a boost

The long-predicted slowdown in US beef production has seemingly come into play this year, and Australian beef is filling some of the production gaps. Total

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.