Insights September 2023

Commodity overview

• Australian cattle prices are expected to record a marginal decline during September. This continues the downwards trend which commenced at the beginning of 2023.
• National slaughter rates continued to increase during August but are likely to remain relatively stable throughout September.

Australian cattle prices are likely to continue softening during the next month. The Eastern Young Cattle Indicator (EYCI) fell to 461c/kg in early September, the lowest point since late September 2019. At this level, the EYCI is 17.4 per cent softer month-on-month and down 49.8 per cent from a year ago. The ongoing decline in cattle prices since the beginning of 2023 has been on the back of rising supply and weakened restocker demand.

National slaughter increased in the last week of August. Weekly slaughter was 4.6 per cent higher than the first week of August and 46 per cent higher year-on-year. Dry conditions in key cattle producing regions throughout August and a dry outlook for spring has likely prompted additional turnoff of cattle. Additionally, processing centres are reported to be fully booked up until mid-October. Without much additional processing capacity available, slaughter rates should remain relatively stable in September. However, there could be additional cattle turned off with a dry outlook for spring and weak restocker demand. These conditions could apply further downwards pressure on cattle prices.

Increased slaughter led to Australian beef exports experiencing moderate growth in August. Total beef exports lifted 5.2 per cent month-on-month to just over 102 thousand tonnes. This was 11.2 per cent higher than a year ago and was the largest volume since November 2019. Strong supply levels are expected throughout September on local markets. This is likely to see export volumes continue to climb. Beef exports for the year-to-date are 19.9 per cent higher than 2022. The strongest growth has come from the US with a 62.2 per cent increase for the year-to-date. This has seen the US overtake Japan to be Australia’s largest export market in 2023. Exports to Japan continued to fall during August, down 4.9 per cent from July and 23.4 per cent lower year-on-year. This decline is due to rising domestic production and a backlog of beef in storage. Exports to China and South Korea recorded moderate growth of around two per cent in August. According to recent USDA forecasts: US beef production during July-September is expected to be 6.1 per cent lower year-on-year. The final quarter of the year is expected to be 4.4 per cent lower. US beef exports are also forecast to finish 6.6 per cent softer year-on-year in the last quarter of 2023. Lower US production creates greater opportunities for Australian beef in key export markets. This also includes the US itself. This export opportunity for the next few months and into 2024 should exert some support on Australian cattle prices amidst current downward pressures.

Source: Meat & Livestock Australia