Australian cattle industry expecting tight supply ahead

By Georgi Gyton

- Last updated on GMT

Live exports are expected to drop back significantly this year
Live exports are expected to drop back significantly this year

Related tags Cattle Us Beef Livestock

Two years of record cattle turn-off and live exports are likely to bring significant contraction in the market this year, according to Meat & Livestock Australia’s (MLA) 2015 cattle industry projections, published yesterday (27 January).

Improvements to cattle prices, as well as competition between the domestic and export markets for reduced cattle supplies, are also forecast, said Ben Thomas, management of market information for MLA.

"The high turn-off has had such a dramatic impact on the national herd and, in the space of just three years, is estimated to decline from a 35-year high of 29.3 million head, to a two-decade low of 26.5 million head by the end of 2016,"​ he warned.

He said the flow-through effects of the high turn-off were likely to last for the rest of the decade.

"Whether there is a widespread break in the drought or not, the high slaughter of the past two years will take a toll on supplies, while seasonal weather conditions will continue to influence farm-gate returns,"​ said Thomas.

Exports of beef are estimated to reach 1.05 million tonnes (mt) swt this year, down 19% due to the expected tightening of the domestic market.

According to MLA’s projections, the US looks set to remain Australia’s highest-performing market for beef, both in volume and value terms. However, the EU is likely remain its most valuable market on a per kg basis, it said. All other beef export markets are expected to decline.

Looking at live exports, numbers are expected to drop back 30% year-on-year to 850,000 head in 2015.

"With fewer cattle available, and assuming uninterrupted market access, the south-east Asian markets – in particular Indonesia, Vietnam and Malaysia – should continue dominating the trade for both feeder and slaughter cattle, taking an expected 70% of live cattle,"​ continued Thomas.

He said the industry looked to benefit from the strong global demand for beef, coupled with a lower Australian dollar, and the current low US beef production.

"One of the key assumptions forming the basis of the 2015 cattle industry projections is that Australia will phase out of drought over the coming 12 months, with a greater proportion of production and exports to occur in the first half of the year, before easing in the final quarters. With this as a key assumption, and given the heavy influence seasonal conditions play on the Australian beef supply situation, the cattle industry projections will be updated on a quarterly basis,"​ added Thomas.

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