Cattle slaughter on track for a 35 year low

cattle field

The Australian Bureau of Statistic’s (ABS) released it’s second-quarter cattle slaughter numbers, showing extreme tight supply in the first half of the year. While the Eastern Young Cattle Indicator (EYCI) hit yet another record this week, and it looks to keep on breaking more, we are going to have to see another reduction in slaughter forecast before the end of the year.

On Tuesday Mecardo looked at the Female Slaughter Rate (FSR), but it’s total and male slaughter which gives an idea of how supply of better value beef is tracking.  Total cattle slaughter for the second quarter was down 20.6% on the same quarter in 2020, but in line with seasonality, up 6% on the first quarter of 2021.

The first half of the year has marked the lowest January to June slaughter since way back in 1984, which was the low following the late 70’s price collapse.  There were 24% fewer cattle processed in the first half of 2021, than in 2020.  This is a huge reduction, and this sort of fall hasn’t been seen in any records going back to 1972.

MLA’s Cattle Industry projections were only updated in July, but are already looking a bit strong on the cattle slaughter front.  With the cattle slaughter forecast pegged at 6.3 million head, it leaves 3.39 million head left for the second half.  With just 2.9 million head processed in the first half, it would require a significant lift.

If we take into account the steady slaughter rates for July and August, it means rates will have to pick up even more in the coming four months to hit the target.  Figure 1 shows that to hit the 6.3 million head, October to December slaughter will have to be 12% higher than last year.

Female slaughter fluctuates wildly with season, but male slaughter tells us more about the size of the herd and how many cattle will be available for the year.  First half male cattle slaughter was down 12%, with most of the fall coming in the first quarter.  Figure 2 shows that male cattle slaughter is generally stronger in the second half, so we might see lifting supply in the spring at least.

What does it mean?

Male cattle slaughter might just be able to hit the levels of last year, but the herd rebuild will see total slaughter fall behind.  Even if total cattle slaughter matches last year, it will only just manage to get past 6 million head.  It was 1985 when there were less than 6 million head of cattle were slaughtered.  Continued tight supply is to be expected, and with it, strong prices. 

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • ABS second-quarter cattle slaughter was up on the first quarter but way down on 2020.
  • First half male cattle slaughter was down by 12%, reflecting a heavy fall in the herd
  • Cattle slaughter will struggle to reach 6 million head, the lowest levels since 1985.

Click on figure to expand

Click on figure to expand

Data sources:  ABS, 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.