Australia's Q1 cattle slaughter rates rise 17.4% on bullish export prices

Australian cattle slaughter rates increased 17.4% in the first quarter to 1.8 million head, with beef production rising 14.5% at 570,000 tons (in carcass weight), the Australia Bureau of Statistics (ABS) data showed.

The increase in slaughter rate was driven by higher culling of cows and heifers, which rose 30.3% to 852,200 head. The higher volume of female cattle slaughtered lifted the female slaughter ratio, or FSR -- a key industry metric that indicates phases of herd liquidation or expansion -- to 47%, up from 42.4% in Q1 2023.

Historically, an FSR of more than 47% indicates herd liquidation while lower FSRs suggest female retention for herd expansion.

"47% has been the historic threshold between rebuild and liquidation. It's a similar ratio in the USA and is likely the proportion of breeders than needs to be retained for the herd to neither grow or decline," said Matt Dalgleish, co-founder and director at Episode 3, an Australian-based Agriculture analytic group.

Despite the increase in Q1 beef supply, market sentiment for Australian beef remains bullish.

Majority of Australian beef output is exported to key markets such as the US, which saw a near 85% jump, or 31,900 tons (in shipped weight), in Q1 2024 trade, based on the customs data.

US import demand has strengthened in recent months, as a result of their own herd liquidation, which supported domestic prices and provided imported products a price advantage.

Platts' 90CL Beef CIF US price assessment, launched on March 18, was assessed up $573/mt at $6,283/mt between March 19-April 11. The prices have fallen since then, down $441/mt, or 7%, to $5,842/mt May 20.

"US prices have declined but from historic high levels. Even a liquidation in Australia will see price support given how supply is so tight in US presently and they are currently our main export market and our major competitor into our other main export markets," Matt said.