Insights April 2023

Commodity overview

• Australian cattle prices are expected to remain relatively stable in April after their steady decline continued during March.
• There are positive signs for export demand as beef exports increased significantly in March. However, exports are likely to be lower during April as public holidays will limit slaughter volumes.

Australian cattle prices are expected to remain relatively stable throughout the next month. This follows the steady downwards trend which continued during March. The Eastern Young Cattle Indicator (EYCI) is currently below 700c/kg, the first time below this mark since March 2020. Values in early April are two per cent lower month-on-month and down 37 per cent from a year ago. The recent decline in cattle prices has mainly been on the back of rising supply after over two years of herd rebuilding and the processing sector nearing full capacity.

The end of March saw weekly national slaughter jump to over 114,000 head. This was the highest weekly slaughter volume since December 2020. This pushed weekly slaughter just above the five-year average and 17.7 per cent higher than a year ago. Slaughter rates will likely decline in April due to fewer working days for processors. However, the longer-term outlook heading towards winter is for continued growth in supply.

Increased slaughter led to Australian beef exports experiencing a significant increase in March. Total beef exports jumped 40 per cent month-on-month to just under 99,000 tonnes. This was the highest monthly volume since December 2019. This continued a recent trend of rising beef exports in the last few months, aside from the subdued volumes in January. South Korea and Japan both saw strong growth with monthly rises of 49 and 23 per cent respectively. Competition with the US has begun to ease in these key markets. The United States Department of Agriculture (USDA) have forecast a decline in beef production in the coming months due to tight cattle supply as the percentage of cattle regions in drought has dropped by over 15 per cent compared to a year ago. Reduced US slaughter is expected if seasonal conditions continue to improve. The decline in US exports is likely to improve export opportunities for Australian beef into South Korea, China and Japan. Chinese demand for Australian beef also increased in March as Brazil imposed an export ban of their beef following a BSE case detection. Beef exports to China rose 59 per cent month-on-month and were the highest volume intake since May 2020. This boost for Australia could be short-lived as trade between China and Brazil has now resumed. Reduced Australian slaughter in April will likely see a temporary decline in export volumes.

Source: Meat & Livestock Australia