New Zealand Cattle Outlook

Much of New Zealand, and especially the North Island, experienced drought conditions during the first half of 2020.

New Zealand Cattle Outlook

Seasonal Pasture Production
The chart below shows the soil moisture deficit conditions in late February 2021. Compared with 2020, the North Island is in a lot better shape, although still significantly drier than the historical average. The far north of the North Island, which is almost exclusively beef or dairy farms, is considerably wetter than 2020. Most regions began 2021 with good pasture and conserved feed supplies, which should carry the majority of farms through until the Autumn rains and slightly cooler temperatures stimulate pasture growth again. Farmer fears of drought conditions on a par with 2019/2020 have largely not materialized.

Cattle Production and Inventory Changes

2021

FAS/Wellington forecasts total cattle slaughter at 4.26 million (m) head in 2021, eight percent below 2020 slaughter levels. Numerically, the largest forecast reduction is for calf slaughter, but more significant for overall beef production is the forecast slaughter reduction of other adult cattle (steers, bulls and heifers). Key dynamics include:

Other adult cattle slaughter is forecast at 1.59m head, 6.4 percent less than 2020. The huge fourth quarter 2020 total slaughter for this group, a result of farmers’ uneasiness about market prospects and concerns another drought was on the cards, is reducing the number of cattle available for slaughter in the first half of 2021. In addition, an industry survey of farmer intentions around stock inventory and sale plans supports the forecast year-on-year reduction.

The calf kill is forecast at 1.68m head, eleven percent less than 2020. This is the result of a ower dairy cow inventory producing slightly less calves, and an increased proportion of dairy progeny being retained for either beef production or the live export trade.

The cow kill is forecast to fall by 4.5 percent from the 2020 total, down to 995,000 head. Both the dairy and beef cow herds are expected to remain relatively stable, which would reduce the annual kill back toward a status quo slaughter number rather than the higher number killed in 2020. Cow slaughter in 2020 was elevated as dairy and beef cow numbers were reduced because of drought conditions. In addition, dairy farmers continued to right-size their herds in advance of new environmental regulations taking affect.

Live heifer exporting became a major factor during 2020. Even though new animal welfare regulations and shipping delays are likely to have a negative impact on exports in 2021, this trade is still expected to have a more significant effect on slaughter numbers than in the past. Yearling heifers that were exported in 2020 otherwise would have matured in 2021 ready for slaughter. However the extent of the effect on heifer slaughter numbers is still not known. More heifer calves from the dairy sector may have been reared just for this trade.

The total 2021 ending cattle inventory is forecast to remain relatively stable with an estimated small 0.4 percent increase to 10.1m head. Industry contacts expect that farmers are most likely to keep the beef herd steady or even grow it slightly in the short term. FAS/Wellington expects the total beef herd to be close to 4m head in 2021. Beef cattle finishing has been favored on the better classes of pasture land not being used for dairy. This is not only because of financial reasons but also because of the lower workload when compared to sheep, which is attractive to older farmers. The dairy cow herd is expected to remain stable, having been reduced by 139,000 head in 2020 during the drought period (January to May 2020). Two years of high dairy prices in 2020 and 2021 are encouraging dairy farmers to maintain cow numbers.

2020
Total cattle slaughter for 2020 was 4.63m head, up 122,000 head (2.7 percent) from 2019. The strong slaughter numbers during the end of 2020 were fairly unexpected. The main drivers behind the slaughter dynamics in 2020 were:

A huge October to December 2020 kill total for adult cattle (including cows) at 641,159 head –which was the largest fourth quarter slaughter number on record, and nine percent ahead of the previous highest fourth quarter. This significant bulge in the slaughter rate was brought about by farmers having misgivings about beef market prospects and nervousness another drought might be developing in the first half of 2021. Because of this many farmers made decisions to sell cattle early while they felt prices were reasonable.

Although it was anticipated that fewer steers, bulls, and heifers in aggregate would be killed in 2020 compared with 2019, after the surge in slaughter numbers in the last quarter of 2020 the opposite was the case. The other adult cattle group slaughter totaled 1.7m head for 2020, which was 20,000 head, or 1.2 percent, greater than 2019. As explained above farmers moved quickly during October to December 2020 to decrease cattle numbers - primarily heifers, steers, and bulls- to prepare in case of drought conditions or significantly lower beef prices in the first few months of 2021.

The cow kill, at 1.042m head in 2020, was three percent ahead of 2019. This was due to the drought conditions in the first half of the year prompting farmers to decrease numbers, of both dairy and beef cows to save feed and maintain cow condition for the remaining cows. As was mentioned, dairy farmers are continuing to right-size their herds in advance of new environmental regulations affecting the dairy sector. Of lesser significance, forestry planting that encroached on land typically used for beef cow grazing was also a factor.

The calf kill in 2020 was 1.88m head, four percent greater than 2019. Even though the meat processors were offering lower prices for calves in 2020 (mainly because hides were nearly unsellable and food service options for veal were scarce) there were no other outlets other than slaughter available for those surplus calves that are not going to be reared for either dairy or beef herd replacements.