Industry News

Cattle Projections 2020

The national cattle herd is set to drop to its lowest level in more than two decades in 2020, following one of the most challenging years on record. In 2019 Australian producers experienced the warmest and driest year ever which was compounded by floods and bushfires at either end of the year. However, despite all these pressures, global and domestic demand for beef has remained robust and helped support cattle prices during these extreme conditions. From a cattle supply perspective, numbers over the next two years are expected to tighten considerably; to what extent will be determined by domestic and global influences, with rainfall and demand from China the stand-out variables. Adult cattle slaughter in 2020 is currently forecast to drop 15% to 7.2 million head. Rainfall throughout January has provided an element of renewed confidence for producers. However, the impact of the extreme conditions last year is expected to maintain elevated slaughter in the first quarter, with an expected tightening of supply as the year progresses. Female slaughter reached new highs in 2019, but is expected to drop off in 2020 as the herd shifts from contraction to rebuild phase – assuming a return to average seasonal conditions. However, with feed and water availability tight in many regions, any persistence of dry conditions beyond the start of year may see 2020 follow the trends seen in 2019. The lot feeding sector has been growing in recent years in response to strong demand for high quality grainfed beef and its key role in finishing cattle in drought conditions. Over one million head of cattle on feed has been maintained over the last seven quarters and this is set to continue in 2020, despite the potential for higher feed and feeder costs. In the past year lot feeders have been a key buyer, paying a premium for cattle and helping maintain prices at historically strong levels. The expected increased grainfed portion of turn-off combined with the lower percentage of female slaughter means carcase weights are expected to increase 3% in 2020. Higher weights should offset some of the decline in slaughter, with production forecast to be down 13% to 2.1 million tonnes carcase weight (cwt). The global protein market experienced an exceptional year in 2019, with the impact of African Swine Fever in China creating a massive protein deficit and a reshaping of the global meat trade as more product was directed to the China market. Australian beef exports were very much part of this shift, with exports to China growing 85% and the market emerging as Australia’s largest market by volume. The protein deficit in China is set to be just as apparent in 2020, but many shifts in the global landscape will impact how this unfolds, including the US-China trade relationship, production and policies from South American suppliers and policy shifts within China itself. Demand for beef from many other key markets around the world remains robust, but buyers must now compete more fiercely for that product. Australian cattle prices are expected to find support in 2020 in the event of a major improvement in seasonal conditions as restockers, feeders and processors compete over a reduced pool of livestock. Young cattle and breeding stock prices will be influenced significantly by the extent of the improvement in pasture availability. With cattle supplies anticipated to tighten over the next few years, continued support for finished cattle prices is expected. Even without rain, finished cattle prices should remain at historically high levels as a result of the aforementioned strong demand fundamentals. Source: MLA Cattle Projections -

Category: Industry News