Conditions drive up cattle market

That is according to the latest Australian Cattle Industry Projections released by Meat & Livestock Australia (MLA) on Monday.

And with above average rainfall predicted for all major cattle regions over the next three months, as well as increased rainfall in northern Australia, pasture growth is only expected to surge and strengthen the national rebuild into 2022.

MLA's market information manager Stephen Bignell said the season in southern WA meant there hadn't been such a liquidation of the herd.

"Seasonal conditions started to improve in autumn 2020, and by the end of next year calves born since this time are expected to hit the market, which will increase the supply of cattle available," Mr Bignell said.

"The rebuild is expected to continue in 2022, as the Bureau of Meteorology (BoM) prediction of La Nina will ensure that groundwater supplies are available."

What this meant he said, is that WA farmers won't liquidate their herd and they weren't be "drought selling" and the northern producers will build on their rebuild into 2022, hopeful of a wet northern summer.

The extent of rain post-drought has resulted in slaughter being revised down to six million head for this year - the lowest level in 36 years.

While carcase weights are still expected to reach record levels, they have been revised slightly down to 308 kilograms, bringing overall production estimates to 1848 million tonnes carcase weight (cwt).

"Low slaughter across the board, including in WA, means producers are investing in rebuilding and we can expect everything to come back online," Mr Bignell said.

"In terms of carcase weights, WA was underperforming somewhat, whereas the rest of the country was having records according to official data released in June.

"We do expect to see some life in WA."

Should next season deteriorate, the favourable harvest conditions of the past two seasons have allowed Australia a feed grain buffer.

Mr Bignell said the record harvest would help WA's feedlot sector.

"We know in the next few wet months the feedlot sector will be picking up," he said.

"In the first quarter of the calendar year, WA has the highest number of cattle on feed, which is different to the rest of the nation."

When it comes to Australia's global beef exports, Korea has remained a strong and reliable market and Japan has continued to purchase the most Australian red meat.

"Australia has exported 660,568t of beef for the year-to-date, with 17 per cent lower volumes for the year-to-September," Mr Bignell said.

"Lower export volumes have been the result of both supply and demand factors.

"Most key export markets have fallen compared to 2020 volumes except for South Korea, which has held steady at a 2pc increase this year.

"Strong consumer purchasing power and sophisticated retail, food service and food manufacturing sectors, combined with a positive image for Australia as a trusted source for taste and high quality beef will continue to underpin long-term growth for Australian exports to Japan."

Key and emerging issues were identified in Australia's live export industry, which continues to endure "the toughest trading conditions in its history".

While prices for Australian producers have been the strongest on record, the corresponding cost of Australian cattle for overseas importers have resulted in negative returns, as they struggle to offset increased costs throughout the supply chain.

Some overseas operators have withdrawn from the market until trading conditions improve.

Depressed in-market demand for fresh beef due to COVID-19 overseas and the domestic combination of tight supply, a favourable season, fierce competition and extreme prices have left live exporters struggling to maintain workable trading arrangements for their overseas customers.

High domestic prices have softened importer demand, with key markets increasingly looking to alternate sources for affordable live cattle supply.

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