Beef Cattle

GVP $3.1 billion est. Down 2% year-on-year.
Producers endured significant price volatility as the market reacted to higher supply and drier conditions.
Exports were robust with much higher volumes partially offset by lower prices.

The first half of the year was characterised by a drier autumn and forecasts of a dry and hot summer. With the challenges of the recent drought still fresh in producers’ memory, many reacted by reducing stock numbers rather than feeding. The drier forecast also undermined overall confidence even in areas experiencing reasonable seasonal conditions with limited buying from restockers and traders. The processing sector continued to struggle with labour constraints which created a significant supply/demand imbalance and prices fell to levels last seen in 2014. However, as the season progressed, conditions in many areas were much better than expected. With processing capacity increasing and strong export volumes, prices recovered in the second half of the year. The Eastern States Young Cattle Indicator (EYCI) finished the year slightly up on last year.

Production

NSW Beef Rolling 12 Month Slaughter ('000)

Slaughter
10 year average

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Source: ABS Livestock Products (2024)

Meat & Livestock Australia (MLA) estimated that the national herd reached its highest level in 10 years by June 2023.⁹¹ NSW’s female slaughter ratio averaged 52% during the year, above 47% which is the level at which the herd is considered to be in liquidation.¹⁸ As a consequence, production increased substantially, up 23% to 1.7 million head, as the herd rebuild came to an end and some herd reduction commenced.¹⁸ Despite the increase in cow numbers as a percent of total slaughter, overall carcase weight fell slightly. Production was up 21% to 513 thousand tonnes.¹⁸

Price

National slaughter capacity in the first half of the year remained below the 10-year average despite the national herd level reaching a 10-year high. Although processors were increasing capacity rapidly, by the end of 2022-23, supply exceeded processing demand which created significant price weakness. This trend continued into 2023-24 and, when dry conditions emerged over autumn, with warnings of worse to come over summer, a surge in supply over September and October 2023 caused the price of all types of cattle to collapse to levels not seen since 2014.⁹³

Beef - Slaughter vs Herd Size ('million head)

Rolling 12 month slaughter (LHS)
Herd size (MLA est, RHS)
Slaughter 10 yr average (LHS)
Herd size 10 year average

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Source: MLA Projections (2024) , MLA Statistics (2024)

Fortunately, the very low prices were relatively short lived, with eventual seasonal conditions being much better than expected. Combined with continued increases in slaughter capacity this drove a sharp recovery in prices by early 2024. Prices for some categories of cattle actually ended the year higher than they started. Nevertheless, average prices for young cattle fell 39% year on year and 29% for heavy steers.⁹³^am

As farmgate prices fell towards the end of 2023 some concerns emerged that the retail price for beef remained very high, especially relative to the price farmers were receiving. These concerns were exacerbated by an emerging cost of living crisis as interest rates increased. As over 70% of Australia’s beef production is exported, it is ultimately export prices which most influence farmgate prices. Domestic retail prices are also typically less volatile than both farmgate and export prices as retailers regard red meat as a core product for attracting consumers to their stores. The significant fall in farmgate prices in late 2023 did create an unusual disparity between retail and farmgate prices, however this was primarily because of the sudden and sharp fall in farmgate prices. As in the period 2020 to 2022, when farmgate prices rose much faster than retail prices, retailers proved reluctant to change prices rapidly. By the end of 2023-24, rising farmgate prices and falling retail prices had corrected this difference though farmgate prices continued to lag export prices.

Beef - retail price vs export price vs heavy steer price (Index)

Heavy steer Price
Retail price of beef
Export price beef

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Source: ABS CPI (2024) , MLA Statistics (2024) , S&P Global (2024)

Trade

Key Beef Farmgate Prices 2024 (cents/kg lwt) ^am

National Heavy Steer Indicator
National Young Cattle Indicator

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Source: MLA Statistics (2024)

With slaughter up significantly, NSW beef exports increased 19% to $2.2 billion, the highest on record, slightly above 2019-20 when turn off was high due to drought.⁷⁹ Export volumes were up 29% to 226,410 tonnes.⁷⁹ Export prices fell 8% however remain 14% above the 10-year average.⁷⁹

China remains comfortably NSW’s largest export market for beef, growing 7% to $874 million, however the standout market was the United States where exports surged 117% to $480 million, becoming NSW’s second largest export market for beef.⁷⁹ Australian beef exports benefitted from improved affordability due to a weaker currency and lower farmgate prices. Lower supply out of the United States also helped.

Outlook

Although 2023-24 proved to be a volatile year for prices, the fundamentals remain strong. Much of the volatility occurred due to fears of the impact of a new El Nino weather pattern emerging and because processors struggled to increase capacity due to labour shortages. There were also concerns that global economic weakness and high beef inventories in cold storage in key export markets would impact export demand. This resulted in short term mismatches between supply and demand. As we move into 2024-25 however, many of these issues have faded. Processing capacity is now much better aligned with supply and continuing to increase. Global inventory levels have fallen, and economic conditions are improving. The US herd has continued to shrink during the year creating opportunities for export (of beef trim) as well as reducing competition in key export markets. The fall in farmgate prices, whilst painful for many, has also materially improved Australian beef’s competitive position in export markets. The short-term weather forecast is also for improved conditions with some possibility of a wetter La Nina weather pattern returning. All these factors should support more stable operating conditions.

DPIRD Initiatives in Focus

New infrastructure investment at Yanco Agricultural Institute for NSW DPIRD flagship Southern Multi Breed (SMB) cows

Research to help commercial beef producers select cattle with the best genetics for their business will benefit from new infrastructure at Yanco Agricultural Institute as part of a flagship NSW Department of Primary Industries and Regional Development’s (DPIRD) cattle project.

New infrastructure investment has enabled the Yanco Agricultural Institute to receive 283 NSW DPIRD flagship Southern Multi Breed (SMB) cows. With another 105 heifers to arrive later in the year.

The cattle are clearly enjoying their new home and over the last month the cows have started calving.

The SMB project underpins the data required to develop and deliver multi-breed genetic evaluation for commercial producers. The project runs head-to-head comparison of Angus, Hereford, Shorthorn, Charolais, Wagyu and Brahman across six NSW DPIRD sites; EMAI, Trangie, Glen Innes, Grafton, Wollongbar and now Yanco. The data collected will provide Estimated Breeding Values (EBVs) for each of these breeds, currently not available to industry.

The progeny of the project is its fifth cohort of animals and to date recorded over 144,000 data records on the project animals.

SMB herd also offers the opportunity to overlay/linkage with other research projects such as the low methane beef project, CSIRO's immune competence project and cow body composition. With further discussion underway.

Find out more about the SMB project here.