Elders’ Business Intelligence Analyst Richard Koch discusses his data driven forecast for the Australian cattle market this spring.
International demand pulls prices higher during winter quarter
The Australian cattle market performed strongly through the winter quarter led higher by export cattle categories as demand from the northern hemisphere strengthened seasonally. Heavy steers and slaughter cow price indicators gained +13 per cent and +24 per cent to average 339 and 279c/kg lw respectively by the end of winter.
Chart showing national indicator saleyard prices for major cattle categories. Source: Meat & Livestock Australia (MLA).
Feeder and restocker steer values (+10 per cent to 363 and 365c/kg lw) were slower to recover but gained momentum through the quarter owing to their relative attractiveness compared to finished cattle and as grain prices fell bolstering feeding margins.
Higher cattle prices were achieved despite markets being well supplied (slaughter was +16 per cent on last year and +13 per cent on the 5yr average) which is testament to the strength of global beef demand.
Chart showing Australian cattle slaughter in 2024-, 2023- and 5-year average. Source: National Livestock Reporting Service (NLRS).
Tightening supply to be price driver in spring quarter
Over the next quarter, markets transition to a period of weaker demand in the northern hemisphere as the summer grilling season ends and temperatures cool. This comes at a time when major global suppliers are pivoting away from Asian markets (where beef demand has weakened) to focus on the US.
Australian exporters have been increasingly reliant on northern American markets as US beef demand has held and as demand from Asia has cooled. So far this year, northern America (US and Canada) has absorbed 30 pc of our beef exports compared to around 22 pc in 2023.
Chart showing Australian US beef exports between July 2023 and July 2024.
US feedlots continue to be well supplied with cattle (August 1 US cattle on feed were +1 pc on last year, but cattle +120 days on feed are +11 pc) and feedlot operators continue to feed cattle to higher weights. US beef processors though are struggling to pass on higher costs to consumers in the face of strong competition from white meats. As higher US fed cattle supplies hit the market over the next few months during a period of weakening demand Australian beef might hit some headwinds.
On the positive side, while we may see some softening in international demand through the next quarter, we should soon get a reprieve from heavy supply. Stronger local processor competition for tightening supplies of cattle will be the key price driver for Australian slaughter cattle values through the spring quarter.
Table showing price indicators across heavy steers, processor cows, feeder steers and restocker steers, in winter months and forecast for spring months.
Through the spring quarter, though, we expect slaughter cattle to take a backseat to restocker and feeder cattle. Graziers and feedlotters will re-invest the gains made on slaughter cattle in the first half of 2024 in restocker and feeder cattle.
The aim will be to feed these cattle to slaughter weights targeting export markets in the local autumn quarter of 2025 when US beef production will be lower, US net imports increase, and as northern hemisphere beef demand starts to improve seasonally.
This trend of lower US beef production and higher US net beef imports (as the US rebuilds its cattle herd) will be the key factor supporting global and Australian cattle prices for the medium term.
Chart showing US net beef imports (US beef imports less beef exports). Source: United States Department of Agriculture.
The information contained in this article is given for the purpose of providing general information only, and while Elders has exercised reasonable care, skill and diligence in its preparation, many factors (including environmental and seasonal) can impact its accuracy and currency. Accordingly, the information should not be relied upon under any circumstances and Elders assumes no liability for any loss consequently suffered. If you would like to speak to someone for tailored advice relating to any of the matters referred to in this article, please contact Elders.
