Beef Cattle

GVP $3.4 billion est. Up 1% year-on-year.
The end of the herd rebuild led to higher production but lower prices.
Export volumes increased despite a weaker global economic outlook.

A continuation of good seasonal conditions in the first half of the year, maintained the trend of herd rebuilding which supported high prices. However, as dry conditions emerged in late spring and summer, stock turnoff increased substantially and restocker demand faltered. As producers began selling, processors struggled to increase capacity to meet the higher supply and prices for all categories of stock declined in the second half of the year.

Production

NSW Rolling 12 month beef slaughter ('000 head)¹⁵¹

NSW Rolling 12 month beef slaughter
10 year average

Download data (.XLSX)

A continuation of good seasonal conditions resulted in subdued slaughter in the first half of 2022-23. However, as dry conditions emerged and, with the Bureau of Meteorology forecasting a high chance of El Nino weather conditions, supply picked up materially over the last two quarters of the year. By year end, 2022-23 slaughter in NSW was up 7.6% year on year.¹⁵¹ With slightly lower carcase weights overall production rose 6.6% to 419,771 tonnes.¹⁵¹ Despite the annual increase, overall slaughter remained well below the 10 year average. The national female slaughter ratio (FSR) also remained below 47% (which is the level usually associated herd rebuilding/liquidation) for the first three quarters of the year, indicating that herd liquidation did not start until late in the year. Until March 2023 the FSR was averaging 43% which indicates strong herd rebuilding. However, in the last quarter of the year the FSR rose to 48%.¹⁵¹

Price

Prices were relatively stable for the first quarter of the year however, as supply increased prices fell. The average Eastern Young Cattle Indicator (EYCI) for 2022-23 fell 25% over the year.¹⁷⁸ By year end the EYCI was 47% lower than at the end of 2021-22 closing at $5.67/kg cwt and losing all of the gains since the end of the drought in early 2020.¹⁷⁸

Prices for finished stock were not as weak. Average heavy steer prices were 14% lower and finished the year at $2.78/kg lwt, 36% lower than the end of 2021-22.¹⁷⁸ In a reversal of trends observed in 2022, the price falls for restockers have been much larger than those for heavy finished stock. The discount between heavy finished steers and restocker steers, which had reached extreme levels during the herd rebuild, finished the year at 50 cents /kg lwt which is only slightly higher than average levels.¹⁷⁸ Like the broader EYCI, all categories of cattle have given up most of the gains since the end of the drought.

Eastern States Young Cattle Indicator (cents/kg cwt)¹⁷⁸

Eastern States Young Cattle Indicator (cents/kg cwt)

Download data (.XLSX)

Difference between heavy steer, feeder steer and restocker steer prices (cents/kg lwt)¹⁷⁸

Feeder steer premium/(discount) to restocker
Heavy steer premium/(discount) to feeder and restocker
Average discount heavy steer to restocker steer

Download data (.XLSX)

Trade

NSW beef exports fell 1.2% to $1.9 billion.³⁵ Although export volumes were up 5% to 175,192, export prices fell 5.9% despite a lower Australian dollar.³⁵ Nevertheless, export prices remain elevated and were the second highest on record.

China remains comfortably NSW’s largest export market for beef and was one of the few major markets where both value and volume of exports increased. The value of NSW beef exports to China reached a new record high of $809 million, up 2.6% year on year.³⁵ China now accounts for 43% of total NSW beef exports. Exports to the United States were also up 6.1% to $220 million as cow slaughter increased during the year. The volume of exports to the United States increased 20% to 20,238 tonnes. Exports to other high value markets, Japan and South Korea were down in both value and volume terms which reflects high prices for Australian beef at the beginning of the year, economic uncertainty in both countries and high inventory levels in cold storage.

NSW Beef Export Unit Price ($A/kg)³⁵

Beef Export Unit Price

Download data (.XLSX)

Outlook

Livestock prices have continued to fall at the start of 2023-24, in some cases materially. The onset of drier conditions and the declaration of El Nino weather conditions by the Bureau of Meteorology has resulted in a significant increase in supply as farmers reduce stock numbers. As more areas experience dry conditions, many producers have clearly decided to sell early rather than feed and maintain stock. The price falls and weather outlook appear to have undermined farmer confidence with limited buying from restockers and traders exacerbating the supply and demand imbalance. Prices are now lower than those experienced at any stage during the 2017-2020 drought despite a much smaller proportion of the state experiencing drought conditions. The EYCI is currently trading at levels last seen in 2014.

Processing capacity is gradually increasing to meet the higher supply however, at this stage not quickly enough to halt the price declines. Processors continue to experience challenges in accessing labour and are also cautious given high red meat inventories in cold storage globally and economic uncertainty as global interest rates rise. At the time of publication weekly processing is now close to average levels, however this will need to increase further if dry conditions continue, or further price falls are likely.

Whilst current prices are creating some difficulties in the short term, the medium-term outlook remains very positive. There are signs that inventory levels in cold storage in key international markets are beginning to clear. Despite the current economic uncertainty, the long-term increase in global demand for beef is expected to continue. The US, which is one of Australia’s biggest beef customers (for beef trim) and also one of our biggest competitors in key market (for premium beef) has been liquidating its herd due to a widespread, multi-year drought. The herd is now approaching a six decade low.⁴⁹ This has created increased competition in export markets at the same time that our livestock prices were high. However, with better seasonal conditions the US is expected to enter a herd rebuilding phase which will reduce supply and competition creating significant opportunities for our exporters to regain lost market share in key markets and also increase US demand for beef trim. Processors are responding to this outlook with regular announcements of increased shifts or new capacity.⁵⁰⁵¹ This should help address the short-term supply demand imbalance and lead to an improvement in prices for farmers.

Stronger Primary Industries Strategy

Saleyard Surveillance Program for Foot and Mouth Disease and Lumpy Skin Disease

Strategic Outcome

Biosecure Industries and Environment

1.2 Coordinate timely and risk proportionate response

Foot and mouth disease (FMD) and lumpy skin disease (LSD) are two of the most significant exotic disease risks to New South Wales. Outbreaks of LSD and FMD in Indonesia in 2022 increased the risk of these diseases entering Australia. In response, the New South Wales Department of Primary Industries (NSW DPI) and Local Land Services (LLS) increased disease surveillance efforts by undertaking a pilot saleyard surveillance program, which aims to:

Identify suspect cases of FMD and LSD requiring further investigation.
Rapidly conduct FMD and LSD investigations and exclusions.
Provide evidence of absence from infection with FMD and LSD.
Support prompt management of FMD or LSD outbreaks at congregation points.

This program involved the visual inspection of cattle at saleyards and cattle tick inspection sites across NSW to identify and diagnose any animals with clinical signs consistent with FMD or LSD.

NSW currently relies primarily on passive surveillance for the detection of FMD and LSD, i.e., it relies on the reporting of suspect cases to state authorities by farmers, veterinarians, and other industry stakeholders. An active surveillance program has the potential to provide evidence of absence of these diseases if there were to be an incursion elsewhere in Australia which may impact trade relationships for NSW.