Australian slaughter numbers started the year strong with weather conditions tilting in favour of processors, and a probable decrease in US beef production could make Australian beef exports more competitive in international markets.
Australian slaughter numbers started firm in January compared with two years earlier. Industry group Meat and Livestock Australia reported 99,206 head slaughtered in the week ending 22 January compared with 72,477 head a year earlier and 2021 had yet to start recording kills with processing low until February.
Kill numbers only exceeded 100,000 head eight times last year, with five of those instances occurring in the last five weeks of 2022. With a stronger start to the 2023 processing year a power shift is starting to be seen towards processors with a strong decline in kill prices, putting downward pressure on feeder steer prices.
Above-median rainfall is moderately likely for small parts of eastern Australia, with below-median rainfall likely for the remainder of Australia for February-April, according to the Bureau of Meteorology. Temperatures are very likely to be warmer than usual across most of the country. Lower rainfall in the coming months before winter will see an increase in available cattle in the market as farmers’ ability to keep higher herd stocking rates decreases.
The US experienced decreased feedlot cattle slaughter and lighter carcass weights at the end of last year, prompting the US Department of Agriculture (USDA) to lower its fourth-quarter production expectation by 115mn lb (52,163t) in its Livestock, Dairy and Poultry Outlook for January.
The USDA sees a rise in fed cattle and feeder steer prices in 2023 in response to firm demand and a reduction in supply.
The impact of drought continues to headline the new year as pasture and forage availability is likely to remain tight, recent US Drought Monitor data show. Rain has bought some relief to producers west of the US, but other parts of the country are still struggling. Over 69pc of the US is experiencing some level of drought, about 4pc less than a year ago, according to the US Drought Monitor report.
Feedlot inventory was at 11.673mn head as of 1 December 2022, about 3pc below 11.985mn head in the same month of 2021, according to the latest Cattle on Feed report by the USDA’s National Agricultural Statistics Service.
Tighter market-ready cattle supply compared with a year ago saw a decline in total fed and non-fed cattle slaughter, which was down by about 5pc and 1pc respectively compared with 2021, the USDA said in its January Livestock, Dairy and Poultry Outlook. It lowered its beef export estimate for the fourth quarter of 2022 by 20mn lb (9,071t) to 850mn lb (385,553t), putting it 6mn lb (2,721t) below the fourth quarter of 2021. Its estimate for exports in 2022 is 3.542bn lb (1.61mn t). Its 2023 forecast is unchanged at 3.09bn lb (1.4mn t).
As beef production slows in the US, the country will look to the global market to fill this void through imports, creating increased export opportunities for others, including Australia.