AUSTRALIA'S cattle herd continues to shrink, and is on course to be 26.1 million head in 2016. That’s 3.2 million head less than when drought began to bite Queensland in 2012.
Meat and Livestock Australia’s third-quarter cattle projections calculates that this loss of cattle will have ramifications for the processing sector, which by 2017 could only have access to 6.9 million cattle - 23 per cent less than the nine million it will slaughter in 2015.
For the industry in general, 2016 will mark the herd at its lowest level in 20 years.
Despite these headline figures, Ben Thomas, MLA’s manager, market information, explains that the data points don’t give the full picture.
Australia’s long-term average annual slaughter is 7.7 million head. The 2017 forecast is only 700,000 head shy of that figure. In times of high demand and high prices, any shortage hurts, but Mr Thomas observes that there will not be a catastrophic lack of cattle for the processing sector.
And the herd as a whole has dipped into the 26 million head zone several times in the past 20 years, most recently in 2010 when it dropped to about 26.3 million.
Increasing carcase weights at slaughter are also taking the edge off the herd decline.
Carcase weights have increased 1-1.5 kilograms per year over the long term, due to factors like genetics and increased numbers of cattle on feed, which blunts the effect of low cattle numbers on beef production figures.
Still, there will be consequences of having herd numbers so low in times of high demand.
For restockers, females will be at a premium. For most of 2014, more females than male cattle were slaughtered. The ratio reversed back toward males in September, but in January 2015, the female slaughter again jumped back above 50 per cent as high prices enticed producers to cull breeding herds more heavily.
And demand continues to grow. In the first six months of 2015, Australian beef and veal shipments came to 646,685 tonnes, up 11 per cent year-on-year.
MLA predicts that there will be little, if any, slowing of momentum in 2015, putting beef exports on track to exceed the 2014 record by two per cent, at 1.32 million tonnes shipped.
The United States, which returned to being Australia’s largest beef customer in 2013 because of its own much deeper fall in herd numbers, took 227,148 tonnes in the first six months of the year, up 48 per cent on 2014.
Japan took 141,814 tonnes, up seven per cent, Korea took 78,786 tonnes, up eight per cent.
The mid-year projections forecast live exports of 950,000 head in 2015, back on 2014’s record of 1.1 million head.
That’s due to a tight cattle inventory in the north, Mr Thomas said, and also a hedge against the political uncertainties in the live trade.
Given Indonesia’s cutting of its third-quarter import permits to 50,000 head, about a quarter of the numbers expected, that hedge looks prescient.
Domestically, Australian consumers are confronting higher beef prices.
The Australian Bureau of Statistics, which regularly provides a beef retail price index weighted across six categories, has set the index at $16.93/kg in its latest update - up nine per cent on the same time last year, and a record high for Australian beef prices.
The trend is similar across developed countries, Mr Thomas noted.
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