National beef herd slips briefly into liquidation, before turning around

Australia’s beef herd briefly dipped into liquidation phase last year, before turning around again in the final quarter after widespread rain, latest meat and livestock statistics issued by the Australian Bureau of Statistics on Tuesday show.

Much the same as the Government’s definition of an economic recession (two consecutive quarters of negative economic growth), Meat & Livestock Australia applies a similar two-quarters formula when looking at herd size changes.

Effectively, two consecutive quarters of ABS female slaughter ratio above the 47 percent tipping-point signals the start of herd contraction.

While the period was only brief, the Australian beef industry did technically enter herd reduction last year, with both July (48pc) and September (49pc) quarters above the 47pc FSR threshold.

The December quarter, which included both the dry October period, as well as rapidly improving pasture conditions during November and December, saw the FSR ratio slip back to 46.87pc. That bought the 2023 annual FSR average to 46.58pc.

“A FSR rate of below 47pc in December indicates that the Australian cattle herd is in a marginal growth phase, following two consecutive destocking periods as shown in the middle of 2023,” MLA’s market information manager Stephen Bignell said.

The ABS data also tracks the big decline in slaughter cattle prices paid during the third and fourth quarter last year, as conditions continued to deteriorate and producers started lightening off numbers.

Gross value paid by processors for slaughter cattle (adult cattle plus calves) in the December quarter was $2.921 billion, representing an average price per head of $1553.

In the previous September quarter, the gross value for slaughter purchases was $3.205 billion, giving an average price per best slaughtered during the quarter of $1774.

The record-high quarterly outlay on slaughter cattle came in September 2022, when cheques to beef producers totalled $3.947 billion, averaging $2672 per head processed.

Analyst and regular Weekly Grill podcast commentator Matt Dalgleish from Episode 3 has devised an index designed to plot ABS $ value of livestock slaughtered, over time.

Starting all four species price indexes at 100 in Q4 2019, the graph published here shows how prices have changed over the past five years.

The cattle index had the strongest increase peaking at 170 in the first quarter of 2022. However, by the end of 2023 the cattle index has pretty much returned to where is started with the index sitting at 102 as of Q4, 2023.

Price trends expressed as dollar per head figures instead of index measurements for beef cattle are displayed below.

Average quarterly cattle prices have climbed from $1,500 per head in 2019 to peak at $2,600 before returning to $1,500 at the end of 2023. It’s worth noting, however, that prices since January have mounted a substantial recovery, with typical slaughter cows and steers up 70-80c/kg. That will be reflected in March quarter ABS data due out around mid-May.

In other data to come out of the December quarter ABS red meat statistics, last year was shown to be a large production year for beef, with full calendar year production up 18pc year-on-year to 2.211 million tonnes – the largest year since 2019 when drought liquidation pushed slaughter near record levels.

“This was thanks to a large national herd and processors handling the increase,” MLA’s Stephen Bignell said.

Official cattle slaughter last year reached 7.029 million head, up 20pc compared to 2022.

 

Article source: Beef Central. Story by Jon Condon

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