Insights October 2023

Commodity overview

• Australian cattle prices are expected to continue easing in October under high supply and weak demand.
• Cattle slaughter rates have continued to track higher than last year and are likely to remain relatively stable during the next month with processors operating at capacity.

Australian cattle prices are likely to marginally decline during the next month. This follows the Eastern Young Cattle Indicator (EYCI) falling 25.7 per cent in the past month to 357c/kg. This was the EYCI’s lowest point since December 2014. The recent decline takes the EYCI 58 per cent lower than the start of 2023 and 67.1 per cent lower than a year ago. The Western Young Cattle Indicator also recorded a downwards shift during the past month, falling 4.7 per cent to 499c/kg. This is down 45.7 per cent when compared to a year ago.

The continued decline in cattle prices has largely been driven by elevated supply. National slaughter rose in September. The last week of September saw weekly slaughter 1.5 per cent higher than the last week of August and 50.1 per cent greater than a year ago. This was also 3.3 per cent greater than the five-year average. In addition to recent years of herd expansion, dry conditions have also contributed to elevated supply. A lack of rainfall recently coupled with the dry and warm weather outlook has likely prompted an additional turnoff of cattle during the past month. These conditions and outlook have also driven a lack of demand from restockers which is set to continue over a warm, dry spring and summer. Adding to challenges in the market is processors operating at capacity. Most processing centres throughout the east coast, particularly in Queensland, are now booked well into late November and early December. Without additional processing capacity, slaughter rates are expected to remain stable during October.

Australian beef export volume recorded a marginal decline during September. Total beef exports were 3.6 per cent lower month-on-month at just under 99,000 tonnes. Despite the decrease, export volume was 40.4 per cent higher year-on-year and was the third largest volume of 2023. Strong supply expected throughout October will continue to translate into elevated exports in-line with recent months. Exports to the US eased 5.2 per cent during September but were a remarkable 185 per cent higher year-on-year. This strong growth is expected to continue for the remainder of 2023 due to reduced domestic production in the US. US weekly slaughter rates during September averaged 611,000 head, down 8.5 per cent year-on-year. This was also two per cent lower than the weekly average for 2023. It is expected that lower US slaughter rates will lead to reduced competition for Australian beef in key export markets. This should support demand for Australia’s ongoing large export volumes.

Source: Meat & Livestock Australia