TL;DR:
- Australia’s beef herd experienced a temporary liquidation phase last year but recovered in the final quarter due to widespread rain.
- Slaughter cattle prices saw a significant decline in the latter half of the year, with a notable recovery in prices since January.
- 2023 marked the biggest beef production year since 2019, with a 20% increase in cattle slaughter compared to 2022.
Last year, the Australian beef herd momentarily entered a liquidation phase, as indicated by the Australian Bureau of Statistics (ABS) in their latest report. This phase, akin to the government’s definition of an economic recession, is marked by two consecutive quarters of the female slaughter ratio (FSR) exceeding the 47 per cent threshold, signalling herd contraction. The July and September quarters saw FSRs of 48% and 49%, respectively.
However, the scenario shifted positively in the December quarter, with the FSR dropping to 46.87%, bringing the annual average to 46.58%. This change suggests the herd has moved into a marginal growth phase, according to Stephen Bignell, market information manager at Meat & Livestock Australia (MLA).
The ABS report also highlighted a significant drop in slaughter cattle prices during the third and fourth quarters of last year, as producers began reducing their stock in response to deteriorating conditions. The gross value paid by processors for slaughter cattle in the December quarter was $2.921 billion, averaging $1553 per head, down from $3.205 billion and an average price of $1774 in the September quarter. This decline followed a record-high expenditure in September 2022, with $3.947 billion paid, averaging $2672 per head.
Analyst Matt Dalgleish introduced an index to track the ABS $ value of livestock slaughtered over time, showing a peak in cattle prices in early 2022 before returning to near-initial levels by the end of 2023. However, a substantial recovery in prices has been noted since January, with a significant increase expected in the March quarter ABS data.
Furthermore, 2023 emerged as a landmark year for beef production, witnessing an 18% increase in full calendar year production to 2.211 million tonnes, the highest since the drought-induced peak in 2019. Official cattle slaughter figures reached 7.029 million head, marking a 20% rise from 2022. This surge in production and slaughter rates underscores the resilience and recovery of Australia’s beef sector, buoyed by improved conditions and a robust national herd.
