Insights June 2023

Commodity overview

• Australian cattle prices are likely to continue marginally declining throughout the next month. Further rises in supply will apply downwards pressure.
• Beef exports are expected to improve as tightening supply in the US and higher Australian supply push export volumes higher.

Australian cattle prices are likely to continue the recent downwards trend seen since the start of 2023. The Eastern Young Cattle Indicator (EYCI) is currently 567c/kg, the lowest point since January 2020. The EYCI in the first week of June was 11.4 per cent softer month-on-month and down 49.6 per cent from a year ago. The continued decline in cattle prices during the first half of 2023 has primarily been on the back of increasing supply on the market. The rise in cattle availability on the market has been a by-product of the previous two years of herd rebuilding. This has led to more cattle reaching ideal slaughter weights.

National slaughter rates increased throughout the past month, peaking at over 120,000 tonnes in the first week of June. This was 15 per cent higher month-on-month. Increased slaughter in the past month is also reflective of the return to normal operation following public holidays interruptions in April. Significant growth has been recorded in Queensland and Victoria of 24 and 10 per cent respectively. The acceleration throughout May has placed slaughter rates higher year-to-date across all states compared to this time last year. It is expected that with continued strong supply on the market that slaughter rates will continue to be firmer in the next month. However, a growth may begin to stabilise as processing capacity limits any significant growth on May levels.  

Increased slaughter and improved demand led to a significant boost in Australian beef exports in May. Total beef exports rose 26.9 per cent month-on-month to just below 80,000 tonnes. Beef exports are expected to rise in June in line with rising slaughter rates. National beef exports in May were 14.4 per cent higher than a year ago. Year-to-date national exports were 20.5 per cent higher than 2022. Growth is being driven by increased exports to the US and China which have seen increases of 43 and 34 per cent for the year-to-date respectively. South Korea has also seen an improvement of 27.6 per cent for the year-to-date. In contrast, Japanese demand has weakened with a fall in year-to-date exports of 2.7 per cent year-to-date. This weakness is stemming from increased Japanese production and weaker consumer demand limiting import requirements. The implementation of the Australia-United Kingdom Free Trade Agreement at the end of May provides Australian beef producers with access to a duty-free quota of over 35,000 tonnes. This is a vast improvement on a maximum limit of 3,761 tonnes in previous years. While this is a positive step, it is unlikely to translate to an immediate improvement in demand and prices.

Source: Meat & Livestock Australia