Australia Cattle Outlook Annual

Production 2021

FAS/Canberra forecasts cattle slaughter in 2021 to decline to 7.4 million head, from an estimated 7.625 million head in 2020, as herd rebuilding is expected to continue throughout 2021 and beyond. If realized, this slaughter number will be the lowest in 36 years. The key reason for the decline is a sharp decrease in expected female slaughter due to herd restocking. Cow slaughter is forecast at 3.15 million head in 2021, down 12 percent from 2020 and 34 percent below 2019.

Rains in early 2020 helped break the two-year drought in some of the hardest hit cattle producing regions in eastern Australia. This resulted in a stark recovery in pastures, which is particularly evident in the most drought affected state of New South Wales – the second largest cattle producing state in Australia (see figure 1). Better rains and pastures have also improved the situation in other key beef producing states.

This positive feed outlook is expected to continue as the Australian Bureau of Meteorology forecasts well-above-average rainfall for the September to November period (see figure 2) across the eastern and central states, where the majority of cattle are produced.

As a result of the turnaround in rainfall and improved pasture prospects, female slaughter rates are forecast to fall in 2021, with a higher proportion of females being retained for breeding purposes after heavy female culling programs in 2018 and 2019. Nationally the female slaughter rate (as a percentage of total adult cattle slaughter) was at an average 51 percent in 2018 and dramatically escalated to 56 percent in the second year of drought in 2019 (see figure 3). This level vastly exceeded the 10-year average of 48 percent. Even during the first half of 2020 this rate remained elevated at 54 percent, indicating that herd rebuilding had not yet commenced during the first half of 2020. Broad consensus is that the annual average female slaughter rate needs to be at 47 percent or lower for the national herd size to rebuild.

Lower cow slaughter in 2021 is forecast to be only partially offset by higher male cattle slaughter, which is forecast at 3.8 million head, up 6 percent from 2020. The favorable seasonal conditions in 2020 have resulted in ample pasture production. This in turn has led cattle producers to retain more feeder cattle (which are predominantly males) on farm and grow them out on pasture, rather than send them to feedlots. Retaining these cattle on pasture extends the time it takes them to reach market weight by around three-fold (when compared to finishing them at feedlots), thereby delaying the slaughter of some of these cattle into 2021 rather than in 2020.

2020

FAS/Canberra’s estimate for cattle slaughter in 2020 is unchanged at 7.625 million head. The estimate for cow slaughter, however, is raised as a result of continued high female slaughter rates during the first half of 2020. This is offset by lower adult male slaughter and calf slaughter.

The FAS/Canberra estimate for cattle slaughter in 2020 is 18 percent below 2020, but actual slaughter during the first half of 2020 was only 8 percent behind the same period in 2019. Slaughter numbers, especially for cows, are forecast to begin to drop sharply during the second half of the year. The key reasons for this expected drop off are:

1) Although herd rebuilding had not begun in the first half of 2020 it has begun in earnest in the second half of 2020. This is expected to result in an even steeper drop in female slaughter rates due to an increase in the number of cows retained as breeders.

2) Cattle numbers in feedlots have been declining partly as a result of producers retaining cattle to be grown out on pasture, rather than feedlots, because of the drought-breaking rains. An indication of this is the decline in cattle on feed at feedlots in the March and June quarters in 2020 (see figure 4). Growing out cattle on pasture extends the time it takes to reach market weight, and as stated some cattle that were expected to be slaughtered in 2020 will likely shift to be slaughtered in 2021.

Despite the recent declining number of cattle at feedlots, the capacity of feedlots in Australia has continued to increase (see figure 4). The feedlot industry represents around one-third of beef produced (see figure 5) and is an important contributor to beef production in Australia via diversifying the product offering to include higher quality grain-fed beef and supporting production in times of drought. Industry sources indicate that there is substantial further expansion in construction and in the planning phase that will be completed over the next two years. Many in the industry expect that world demand for grain-fed beef will continue to grow, and as a result the industry is increasing capacity in advance of this growth.

Trade

2021

FAS/Canberra forecasts cattle exports in 2021 to decline to 900,000 head from a revised estimate of 1.1 million head in 2020. The two key reasons for the decline are:

1) A contraction in breeder stock in recent years has reduced the calf crop that will be available for export.

2) Increased price spreads between feedlot feeder cattle and live export trade cattle are making it economic to shift some cattle from live export.

Most of the beef cattle sourced for the live export trade are from the northern part of the Northern Territory, north Queensland and Western Australia. These regions represent over three-quarters of all live cattle exports from Australia (see figure 6). The other key live export port is Portland in Victoria which is more focused on the live dairy cattle trade due to its proximity to a major dairy farming region.

These regions were not immune to the drought in 2018 and 2019 and industry sources indicate that the female breeder numbers have declined, reducing cattle numbers available for live export. In addition, because of extremely high domestic cattle prices (see figure 7), some cattle which typically would be exported may move south into other cattle producing areas or feedlots. The major live export destinations are Indonesia and Vietnam, which have a preference for Bos Indicus (tropical breed) cattle to suit their conditions. Northern Territory and northern West Australian cattle producers, due to their proximity to these markets and lack of feedlots or beef processing plants in their regions, largely only have the option to sell cattle into the live cattle export market. However, cattle producers in north Queensland have more options due to their relative proximity to other producing areas and feed lots in central and southern Queensland, and can sell either for export or to domestic cattle buyers.