Herd rebuild kicks in but it won’t be uniform

Both MLA and livestock agents, however, acknowledge the rebuild is by no means uniform and any sort of recovery in numbers hinges on at least average rainfall for the year.

MLA’s 2017 cattle industry projections, released this week, have the herd increasing in 2017 for the first time in three years, up three per cent year-on-year to 26.9 million head.

The tight supply situation is not expected to ease in the first half of the year, keeping the young cattle market at its robust level, but in the second half beef production is expected to slowly start increasing again, putting some downward pressure on prices.

The fact the female percentage of slaughter has now dropped below 47pc is an indication Australia is ‘busy rebuilding’, MLA says.

For the week ending January 20, the eastern states total slaughter was 112,995, down 18pc on last year, with the female contingent down 19pc year-on-year in Queensland and 14pc in NSW.

MLA market manager Ben Thomas said the general expected trend was for NSW and Victorian producers to rebuild at a faster rate than their northern counterparts.

Queensland and Northern Territory herds are not only in a greater deficit but recent heatwave conditions - in some areas going back to November - are likely to have inhibited the otherwise anticipated above-average branding rates, according to MLA analysts.

Anecdotally, Gulf country herds had been most affected, Mr Thomas said.

Consecutive years of above-average rainfall was needed for the northern herd to get back to pre-drought levels and the forecast was it would take at least until 2021 for Queensland to recover from the deficits, he said.

Alice Springs livestock agent Doc Cunningham said the ‘absolutely brilliant’ season in his neck of the woods meant fertility rates were ‘through the roof’ and cow condition superb.

Plenty of cows and calves would be held onto this year, he said.

“We haven’t had a season this good since the ’70s, with the past couple of months the icing on the cake of a pretty good year,” he said.

“There’s probably not a lot of buying in going on though, with the way prices are. Most are looking to breed up numbers.

“Given that, it will probably be closer to 18 months, all going well, before numbers are really back to where they were.”

Cloncurry agent Peter Dowling, Ray White Livestock, said western Queensland was experiencing one of the more normal seasons.

“We probably haven’t ever seen west of Camooweal to Tennant Creek looking better,” he said.

“There are people looking for breeders but there is no big rush at this stage.

“Demand for backgrounding cattle and breeders will be determined by the season over the next few months.”

NSW’s south west slopes agent Aaron Seaman, Elders Young, said while his clients were probably joining and calving down as many as they possibly ever have, it would still be three to four years before numbers were back to what was considered normal.

Feedlot and processor competition was still taking plenty of heifers and cows out of the restocker market, he said.

The latest MLA market projections show that with fewer females expected to be processed, combined with generally lower national stocking rates across the nation, the average carcase weight of Australian adult cattle should rise slightly from last year’s level – from 286 287 kilograms a head.

Multiplied across the 7.1 million head of cattle anticipated to be slaughtered, that will push beef production to 2.05 million tonnes carcase weight, which is just 2pc lower than the previous year.

One of the key points the latest projections bring out, according to Mr Thomas, is that if Australia continues to follow a similar pattern to what has happened in the United States, when cattle prices realign with the rest of the world they will stabilise at a level above the previous long-term average.

“For five years to 2012, US feeder steers were just under A$3/kg liveweight and when they broke through they more than doubled over 25 months,” he said.

“They came down at a similar rate and bottomed out above the long-term average.”

MLA predicts a similar path for us but ‘not yet, not as fast and not as big.’

Looking further ahead, 2018 is forecast to see beef and veal production increase 6pc from the 2017 levels, to 2.17 million tonnes carcase weight, which is close to the ten-year average.