Australia's cattle industry continues to face a series of unique and unprecedented market conditions across both supply and demand. The forecast 'drought-breaking' rains never fully arrived over the winter, though a strong outlook for rainfall predominately across the eastern states for the remainder of 2020 has seen intentions for a herd rebuild continue to strengthen. While COVID-19 has disturbed some markets and market segments, overall, both global and domestic demand for Australian beef remains stable, with no strong evidence of major negative impacts at the time of publication.
While southern states have reported regular rainfall for the majority of 2020, the effects of the 2018–19 drought remain evident in sub-soil moisture levels that will require good spring rain to replenish ahead of the coming summer. The poor 2019–20 monsoon season has left some northern regions drier than average, especially in Queensland. However, there is the expectation that an earlier La Niña influenced monsoon season will offer northern producers greater confidence. Meanwhile, cattle continue to flow south, as northern sellers take advantage of strong prices and southern buyers look to rebuild ahead of an anticipated supply shortage.
July's projection forecast for a 17% decline in cattle slaughter from 2019 levels remains unchanged, with 2020 slaughter estimated at seven million head. As of June, the female share of adult cattle slaughter has been higher than anticipated at 56%, though the proportion is steadily decreasing. When viewed alongside the 'total slaughter as a percentage of herd' figure of 31.2%, it illustrates the rebuild sentiment is yet to fully dominate on-farm production decision-making.
Live cattle export shipments remain reasonably stable and are expected to return close to 2018 levels, though down 16% on 2019. Having fallen an estimated 12% in the two years to June 2020, the Australian cattle herd is still forecast to increase by 1.9% to 25.1 million head in the year-to-June 2021, encouraged by a breaking of the drought and high cattle prices.
July's forecast for total beef production volume has been revised on the back of a minor adjustment to carcase weights, and are now expected to decline 15% to 2.05 million tonnes carcase weight (cwt) in 2020. The average carcase weight for 2020 is projected to rise 9.4kg to average 293kg/head, resulting primarily from improved access to feed and a fall in the share of female cattle killed.
While global markets continue to face uncertainty from COVID-19's economic impacts, international demand for Australian red meat remains buoyant. The global 'mega-trends' of growth in population and middle-class incomes, combined with continuing effects of African Swine Fever (ASF) on Chinese pork supply, underpin the appetite for Australian beef. While export volumes are down on 2019 due to supply shortages, the export value to July rose 4%, to just short of A$6 billion.
The sharp gains that cattle prices experienced in early 2020 have been consolidated, and apart from a short COVID-19 driven slump in March and April, remain at record levels. While the international scene remains uncertain, high cattle prices are expected across summer as anticipated drought-breaking rainfall will allow the herd rebuild to gain pace, supported by sustained demand both domestically and abroad.