We are one month into 2021, and the lack of cattle supply continues to drive cattle prices higher. While it was speculated many times last year that the push-back from international markets on Australia’s sky-high beef prices would counteract our domestic low herd figures - and positive seasonal conditions - it definitely hasn’t yet. There’s a longer than usual lag on slaughter figures being released at the moment, but the data we do have is telling enough. And we aren’t the only ones, with the US reporting this week their 2019 and 2020 calf crops were smaller than first estimated.

Rabobank’s Agribusiness Outlook for 2021 has coined the following for the beef sector in 2021 – “A rebuild year, with favourable conditions triggering increased breeding numbers and reduced slaughter keeping cattle prices firm.” And so far, this is proving accurate, with females in high demand and most processors taking the record high 888c/kg Eastern Young Cattle Indicator on the chin. Processors struggling with the price levels have closed or made cuts for the foreseeable future.

So how much has production dropped? Well, total cattle slaughter in 2020 was down 21 per cent, and has started 2021 well below the five-year average. If you compare the first month of figures, this year’s weekly slaughter average is 50 per cent lower than last years. Yardings are obviously in the same boat, significantly lower than last year, with 77,000 less cattle flowing through the east coast centres.

Exports are always slow in January, but this year has taken a particular tumble, with only about 49,600 tonnes of beef headed overseas – or 21 per cent less than the five-year average, and 37 per cent less than the same month last year. According to the latest Steiner Consulting Report, imports to the US from Australia were down 40 per cent for the first four weeks of the year, and this alongside other supply constraints has sent their imported beef price higher. US beef production is currently higher year-on-year, as are their carcass weights, but a revision of US calf numbers for the past two years has raised questions about fed cattle supplies later in the year.

What does it mean?

Demand for Australian beef continues to well and truly outstrip our slim supply, and it seems this equation isn’t going to change anytime soon. As more rain fell in NSW and Victoria over the past fortnight, that grass fever remained too strong for any potential global indicators to diminish. And why not – supply and slaughter doesn’t replenish overnight, why not turn grass into beef, and beef into big bucks, while the sun shines.

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Key Points

  • Total cattle slaughter is now more than 20 per cent lower year-on-year.
  • The first three weeks of 2021 is 33 per cent lower.
  • Export figures have followed, dropping 37 per cent for January, compared to 2020.

Click on figure to expand *Slaughter data for last week not yet released. 

Click on figure to expand

Click on figure to expand

Data sources: MLA, Mecardo

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