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Insights June 2024

10 June 2024 |Cattle

Insights June 2024

10 June 2024 |Cattle
The June update provides an analysis of production and pricing trends for Australian cattle producers.

Commodity overview

  • Australian slaughter rates recorded strong growth throughout May, on the back of a lift in supply availability on local markets.
  • Australian cattle prices remained relatively stable month-on-month, however strong export demand is likely to apply upwards pressure on local market prices throughout June.

Australian cattle prices were volatile throughout the past month. The Eastern Young Cattle Indicator (EYCI) reached a peak of 626c/kg in the middle of May before falling to a low point of 597c/kg in the final week of the month. The beginning of June has seen prices recover to 607c/kg. This places the EYCI on par with a month ago and 4.7 per cent higher year-on-year. The Western Young Cattle Indicator (WYCI) recorded a moderate increase of 9.2 per cent, concluding at 495c/kg. This is 25.2 per cent lower than a year ago. Strong international demand for Australian beef will continue to provide support for prices. Additionally, with the Bureau of Meteorology forecasts showing 25-100 mm of rainfall in the next week in cattle areas. This is likely to encourage restocker demand and provide further support for prices.

National weekly slaughter saw an uplift in May to average just over 137,000 head a week. The strong growth was exemplified by the final week of May which was up 14.6 per cent year-on-year. Year-to-date slaughter is 18.6 per cent greater than in 2023. Northern plants have managed to continue the strong growth in volume processed with extra shifts on weekends. Additionally, processing centres have been purchasing more stock at lower prices in the north. This is due to most southern buyers buying more local. The onset of winter conditions in southern regions has seen a greater amount of cattle onto local markets. This has been pushing the price marginally lower throughout the final two weeks of the month. With a greater amount of southern processing centres purchasing local, this has decreased competition for northern plants. This has allowed them to buy more cattle. It is expected that the growth in processing capacity will continue throughout June. However, with rainfall forecast in cattle regions restocker demand may lift. Should this eventuate, it will be creating a more competitive environment and lifting prices.

China has recently announced the removal of suspensions on five Australian processing centres. These are primarily located in Queensland and New South Wales. These restrictions were implemented over four years ago. Now suspensions on eight out of the original ten processing centres have been removed. Australian beef exports to China were worth over $1.6 billion in 2023 and are now expected to lift higher. Throughout the first quarter of 2024, exports to China have been three per cent higher year-to-date. This is now expected to lift heading into the second half of the year. However, strong growth may be limited with domestic consumption levels in China remaining stable. Additionally domestic production is forecast to be lifting two per cent this year.

The US continues to battle with a reduced herd. A recent USDA report forecast US production at 12.1 million tonnes. This is two per cent lower than the previous forecast last month and comes on the back of lower inventories. The US inventory level from the beginning of 2024 was at the lowest point since 1951. It is forecast to continue softening throughout the remainder of this year. US exports are also forecast to decline on the back of lower production levels and competitive prices internationally reducing demand for US beef. The decline in production is likely to continue providing Australian producers with strong export opportunities.

A graph showing Australian beef exports to Australia’s top four markets from May 2021 to April 2024. Beef exports were the highest April volume since 2015.
A graph showing monthly Australian beef exports to China. Exports improved in 2023 but remain well below 2019 peaks prior to suspensions on beef processors being imposed.

Source: Meat & Livestock Australia, DAFF

This article is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Rural Bank, a Division of Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL/Australian Credit Licence 237879, makes no representation as to or accepts any responsibility for the accuracy or completeness of information contained in this report. Any opinions, estimates and projections in this report do not necessarily reflect the opinions of Rural Bank and are subject to change without notice. Rural Bank has no obligation to update, modify or amend this article or to otherwise notify a recipient thereof in the event that any opinion, forecast or estimate set forth therein, changes or subsequently becomes inaccurate. This article is provided for informational purposes only. The information contained in this article does not take into account your personal circumstances and should not be relied upon without consulting your legal, financial, tax or other appropriate professional.

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