Strong rebound expected in Australian beef production and exports next year, USDA says

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The US Department of Agriculture has predicted a strong rebound in Australian beef production and exports next year as Australia continues to recover from the severe 2019-20 drought.

The USDA’s Foreign Agricultural Service compiles an annual set of forecasts for major beef producing and consuming countries through the Global Agriculture Information Network database. About 2000 reports are added every year.

The Australian report provides a useful precursor to Meat & Livestock Australia’s annual industry projections, due in January.

Australia’s latest FAS analysis released last week suggests beef supply will take a substantial step towards recovery in 2023 after falling to the lowest level in decades in 2021 and generating only improvement marginal in 2022.

“The Australian beef industry is expected to continue its strong herd rebuilding in 2023, albeit with increased female slaughter rates,” the report said.

“For the third consecutive season, most Australian cattle farmers have experienced excellent grazing conditions and the forecast for the coming months calls for well above average rainfall. With support from increased female slaughter, overall cattle slaughter, beef production and beef exports are also expected to increase in 2023,” the report said.

Female slaughter rates have fallen further in 2022, from the already very low level of 2021 at the start of a herd rebuilding following a severe multi-year drought. Higher female slaughter rates next year will help boost beef production and exports.

“Australian cattle farmers have also benefited from record cattle prices in recent years, which has boosted confidence to continue moving forward with a strong herd rebuild.

The FAS report suggests an increase in Australian adult cattle slaughter in 2023 to 7.2 million head, an increase of 890,000 head from the downwardly revised 2022 estimate of 6.31 million head.

“As part of the herd rebuilding, the number of young cattle has increased to such an extent that, combined with good pasture production conditions so far in 2022 and the heavy rainfall expected in the coming months, the number of cattle ready for slaughter will increase significantly in 2023,” the FAS said.

Seven of the country’s top ten beef producing regions are located in Queensland (see map) and rainfall in the first seven months of 2022 for Queensland has been at or above average overall.

This was a positive scenario for beef production, particularly for North Queensland, which has not done as well as Central and South Queensland and the Southern States over the past two last years.

Top 10 cattle numbers by natural resource management region

“The only significant livestock production region that has experienced low rainfall in the first seven months of 2022 is the northern part of the Northern Territory. However, this region is almost exclusively focused on the live cattle trade with little impact on national slaughter figures.

The Australian Bureau of Meteorology predicts a high chance of above-average rainfall across the country (other than Western Australia – which accounts for just 8% of the herd) from September to November this year.

“This, combined with the advanced stage of overall herd rebuilding and good rains in the first half of 2022, is encouraging pasture production and livestock growth to support the projected increase in slaughter numbers for 2023,” says the FAS report.

Beef production

The FAS projects that Australian beef production in 2023 will increase by 13% to 2.2 million tonnes carcass weight equivalent, compared to the revised 2022 estimate of 1.95 tonnes.

This projected increase correlates with an expected 14% increase in cattle slaughter volume, but carcass weights are expected to decrease slightly with a lower projected proportion of total feedlot cattle slaughter, but also a higher rate of female culling.

For 2023, the FAS says the total number of slaughters is expected to increase, but the proportion of cattle in the feedlot will decrease. This is despite the fact that the number of feedlot cattle continues to rise, as the slaughter of grass-fed animals is expected to increase further.

Based on past trends, the average carcass weight of adult Australian cattle slaughtered is expected to fall next year to 317kg, from 320kg in 2020.

“Typically, finished grass-fed cattle have on average lower slaughter weight than finished Australian cattle on feedlots. There is no absolute direct correlation between the two, but there is a strong influence,” FAS said.

Other factors, such as droughts or years of high pasture production (which impact the number of female culls and the proportion of total cull in feedlots), and the number of “High carcass weight Wagyu animals generated by feedlots are influences on average carcass weight worth considering, he said.

Export trade up 15%

The FAS projects Australian beef exports in 2023 to reach 1.5m tonnes carcass weight, up 200,000t from the slightly lower 2022 estimate. However, exports will remain well below from the last pre-drought peak of 1.77 million tonnes in 2015.

The expected increase in beef exports is mainly related to the expected increase in beef production in 2023.

“In Australia, there has been a general trend towards an increasing proportion of the national cattle slaughter coming from feedlots. Once the drought is over and herd rebuilding begins in 2020, the national slaughter declined significantly, but the number of feedlot slaughters declined only slightly, despite fierce competition for young cattle from replenishers seeking to bulk up grass-fed beef cattle” , FAS said.

The feedlots had managed to maintain high numbers and meet export demand for beef and meet somewhat lower domestic demand, in part by passing on the higher cost of beef.

For 2023, FAS expects the herd rebuilding phase, now at a more advanced stage, to mean that there will be less competition for young cattle from restockers (who have typically paid a premium per relative to feedlots during national herd rebuilding), which will result in more available supply for feedlots.

This should allow feedlots to produce more grain-fed cattle (preferred by export markets, especially North Asian markets) at more competitive prices, supporting the projected increase beef exports.

Domestic consumption

The FAS projects an 8% increase in domestic Australian beef consumption to 720,000t carcass weight in 2023, from the downwardly revised 2022 estimate of 667,000t.

This expected increase is mainly related to the expected increase in beef production.

“If realized, this would be the highest level of domestic beef consumption since 2018, when for many years consumption was significantly higher,” FAS said.

With higher beef production expected in 2023, the competitiveness of beef against other meats is expected to improve, which will support higher consumption. However, the rise in the cost of living in Australia in 2022 is expected to continue into 2023, which will impact the level of consumer disposable income. This could have a dampening effect on beef purchases, hampering an even larger increase in predicted beef consumption,” the service said.


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