Australia's cattle herd to rise in second half of 2017

Australia's cattle herd is forecast to rise from a historic 24 year low during the second half of 2017.

Australia's cattle herd is forecast to rise from a historic 24 year low during the second half of 2017.

Australia’s cattle herd size is set to grow during this year, after a steady 20 year decline.

The nation’s cattle herd is expected to be at 25.9 million head in 2017, a historical 24 year low and down from 29 million head in 2014.

But, Meat & Livestock Australia’s senior beef market analyst Ben Thomas said national indicators point to our nation’s cattle herd increasing during the second half of 2017.

“The national female percentage of adult cattle slaughtered has now dropped below the 47 per cent mark, which indicates our cattle herd numbers are in a rebuilding phase,” Mr Thomas said.

Cattle analysts view a female percentage of adult cattle slaughter below 47 per cent as an indication Australia’s future cattle herd size will increase.

“Once the second half of 2017 rolls around, assuming average seasonal conditions in the back half of the year, we forecast Australia’s cattle production to rise, and therefore result in a slight lift to our national cattle herd size,” Mr Thomas said.

“The female retention in 2016 was a lot higher than in previous years, plus some of the reported branding rates were slightly better than last year in parts of northern Queensland.”

Despite a predicted rise in cattle herd numbers, market analysts expect cattle supply to remain tight over the next six months.

“We anticipate the demand from processors, lot feeders, restockers, and live exporters to remain strong throughout the first half of 2017,” Mr Thomas said.

Australian cattle prices hit record highs in September and October of 2016, with the Eastern Young Cattle Market Indicator reaching a record high of 720.25c/kg in August last year.

Mr Thomas said the increase in cattle herd numbers during the second half of the year will result in more cattle being available.

“I expect the rate of decline in cattle prices to be directly linked to the speed in which Australia’s cattle herd rebuilds,” he said.

“The growth of the nation’s cattle herd is very dependent on whether or not we have above average rainfall over the 2017/18 wet season, and the year after that as well.”

MLA analysts forecast cattle prices to eventually fall from the current high levels and consolidate at a level 30 to 40 per cent above long term cattle price averages.

The average young domestic feeder steer price (330 to 400kg) is 190c/kilogram live weight for a five year average up until 2013. This means a young domestic feeder steer may sell for 266c/kg live weight at the start of 2019, according to MLA cattle price forecasts.

“It took the American beef market 15 months for cattle prices to fall from record high prices,” MLA’s Ben Thomas said.

“Traditionally, Australia’s beef market follows a similar trend as the USA and I expect our cattle prices to settle around 30 to 40 per cent above historic cattle price averages.”

Mr Thomas added that Australia’s cattle herd is more likely to rebuild faster in the southern half of Australia, than northern parts of the country such as Queensland.

“It will mostly likely be 2018/19 before the southern herd gets back to a normal size, but it’s not going to be until 2021 our entire Australian cattle herd will be back at a long term historical average level.

“You can expect to see relatively tight supply of cattle for at least the next two years.”

The EYCI finished on Thursday at 640.50c/kg cwt.

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