Insights May 2020
Insights May 2020
- Eastern states cattle slaughter is expected to fall 16 per cent year-on-year to the lowest levels since 2000. A wet
autumn in eastern states is expected to encourage restocking activity, in turn providing support to young cattle
- Shifting beef consumption and uncertainty for export demand as a result of COVID-19 measures will continue to
weigh on finished cattle prices until social distancing measures ease both locally and in export markets.
- Disparity between young cattle prices and finished cattle prices will continue and challenge cattle trading and
Australian beef production is set to tighten as producers in eastern states seek to retain stock and begin rebuilding depleted herds in response to improved pasture growth following a wet start to 2020.
Supply has already reduced with average weekly eastern states cattle slaughter for the year to date lower than 2019 by 7.8 per cent, but is forecast to finish 2020 16 per cent lower than 2019 and the lowest level of production since 2000.
Lower beef production will be the primary cause of lower export volume in 2020 which is expected to fall below one million tonnes for the first time since 2012.
Behavioural changes in response to COVID-19 social distancing measures will shift the mix of beef consumption and is already impacting demand for Australian beef in both export and local markets.
Finished cattle prices will remain under downwards pressure as processors remain challenged to capture the full value of carcasses as a result of reduced demand through foodservice channels, particularly at the higher end of the market.
Pressure on prices is expected to ease as foodservice channels reopen. This is already being seen in China where beef export volumes recovered in April to be 15.3 per cent higher year-on-year.
The ongoing requirement for imports to fulfil the protein supply gap resulting from African Swine Fever will support demand for Australian beef exports in China.
In contrast, young cattle prices will remain well supported by strong restocker demand in eastern states, especially if the favourable rainfall outlook eventuates and adds further confidence for producers to restock.
However, weaker finished cattle prices in the near term will likely limit any upside potential for young cattle prices and keep them below the peak seen in early March.
Source: Meat & Livestock Australia
*MLA Cattle Market Price Indicators (CV19) have been added to previously reported cattle indicators from 25/3/20