The Australia beef industry is showing signs of entering a herd rebuilding phase, the USDA’s Foreign Agricultural Service said in a report.
The rebuilding efforts firmed FAS/Canberra’s 2021 forecasts of lower cattle slaughter, cattle exports, beef production and beef exports, the report said.
With a reduced breeding herd and more heifers expected to be retained for breeding in 2021, cattle slaughter was expected to fall for the second straight year, the FAS said. Beef production was forecast to reach 2.075 million tonnes Carcass Weight Equivalent, down 2% from 2020 and the lowest level since 2003.
That was expected to lead to another year of declining Australian beef exports in 2021, down 5% from 2020 to 1.4 million tonnes, CWE.
2021 CALF CROP SEEN LOWER
FAS/Canberra forecast calf production in 2021 at 8.2 million head, a reduction of 100,000 from 2020, the report said. This is because of the reduced beef cow breeding stock, an effect of the 2018 and 2019 drought, as well as high beef cattle prices encouraging a high female slaughter rate in 2020.
Poor autumn (Mar-May) rains in 2018 marked the onset of the drought in beef cattle producing areas across the eastern states and northern areas of the country, the FAS said. Cattle producers responded by commencing destocking programs.
The drought continued to deepen with poor spring (Sep-Nov) rains in 2018, a below-average wet season (Dec-Mar) in the tropical and sub-tropical regions, and poor autumn and spring rains in 2019, the report said. Because of the lack of pasture in 2019, cattle producers continued to reduce stocking numbers, and in some areas totally de-stocked.
That resulted in significant reductions in breeder numbers and female calves born in 2018 and 2019, the FAS said.
BEEF EXPORT FORECAST BELOW 2020
FAS/Canberra revised upward the beef export forecast for 2021 to 1.4 million tonnes (CWE), but this remains below 2020 by 76,000 tonnes (CWE), the report said. The decrease was because of lower forecast beef production and higher domestic consumption, but is a much smaller decrease than the change between 2019 and 2020.
The 2021 revision is a 40,000-tonne (CWE) increase over the official USDA forecast, FAS said. The four major export destinations for Australian beef – Japan, China, US and South Korea – have accounted for 75% to 80% of Australian beef exports over the last four years.
In 2020, even with a 15% reduction in overall exports, the volumes to South Korea and Japan remained stable, the report said. There was a 34% decline in exports to China, although this came off of a very large increase in 2019, and the volume was still 24% above 2018.
There also was a 14% decline in exports to the US.
CATTLE, BEEF RECAP
Fed cattle trading this week was at $114 to $115 per cwt on a live basis, up $1 from last week. Dressed-basis trading was steady at $180.
The USDA choice cutout Friday was up $0.14 per cwt at $228.61, while select was up $0.52 at $218.11. The choice/select spread narrowed to $10.50 from $10.88 with 76 loads of fabricated product and 45 loads of trimmings and grinds sold into the spot market.
The USDA reported Thursday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.15 to $1.20 a bushel over the May CBOT futures contract, which settled at $5.46 1/2 a bushel, down $0.11 1/2.
The CME Feeder Cattle Index for the seven days ended Thursday was $134.28 per cwt, up $0.33. This compares with Thursday’s Mar contract settlement of $135.52 per cwt, down $1.40.