Key points:
- Two key lead indicators point to 2022 being a historical year in terms of retention of stock to rebuild numbers.
- Cattle supply in 2022 tightened even further as the rebuild extended into Queensland, seeing year-to-date yardings fall nationally by 256,000 head on 2021.
- Cattle prices remain above the 5 and 10-year averages for the whole year, despite experiencing volatile market conditions at times.
Buyer demand, a greater selectivity on quality and wet weather were the hallmarks of a historically momentous 2022 year for Australia’s cattle industry.
Australia’s cattle market continued to experience exceptional operating conditions on-farm in 2022, with above-average weather patterns supporting improved long-term confidence. However, the wet weather also hampered cattle performance in both the paddock and the feedlot, setting supply back well into spring.
There were three key hallmarks of the year:
- intense demand between restocker and feeder buyers driven by tight cattle supply and confidence in the season
- greater selectivity on quality
- logistical and operational challenges were felt across the supply chain as a result of inclement weather and COVID-19.
How is the herd rebuild tracking in 2022?
A key statistical indicator on how the herd rebuild is performing is the female slaughter rate (FSR), this technical lead indicator measures the number of female cattle processed compared to the total on a quarterly basis.
Since the Q3 2021, the FSR has averaged its lowest figure consecutively, on record, over 12 months, surpassing the 2010–2012 rebuild period.
Knowing that the retention of females has been high, longer term, continual supply of cattle in 2023 and 2024 can be expected with a larger breeder cow herd delivering increased calf drops with higher-than-average branding percentages.
The stock turn-off ratio (STR) measures the number of cattle processed and sent to live export compared to the herd size as a percentage. The STR is also used as a lead indicator for retention of animals to rebuild numbers and with lower slaughter and live export volumes expected for 2022, the STR is forecast to hit its lowest level on record, at 24% well below the long-term average of 31%.
Supply
Yardings
Total national yardings in year-to-date terms for 2022 are down 12.4% or 256,000 head compared to 2021 volumes and softer by 45% or 1.44m head on the 2018 drought year. All states have experienced significant declines, with Queensland, Victoria and WA registering the largest falls, softening in YTD terms by 92,957, 74,626 and 36,124 compared to 2021. While NSW is only operating 28,000 head or 4.5% below YTD 2021 levels, this performance clearly recognises the maturity of NSW’s rebuild comparative to other states and that a larger supply pool of cattle are available in the state.
At a category level, yearling heifers and grown steers yardings have softened the most in YTD 2022, falling by 41,033 and 39,936 head compared to 2021. With the yearling heifers clearly highlighting the rebuilding intentions of producers in retaining heifers to join.
Feedlots
For feedlots in 2022, records were broken in all measurable indicators despite the intense nature of the herd rebuild occurring around the sector, a unique insight into the resilience and important nature of lot feeding Australia’s cattle and the role it plays in the supply chain.
Compared to the 10-year average, numbers on feed in quarter 3 2022 were 9% or 83,000 head higher. While national capacity in the same quarter broke new ground to hit 1.51m head, a new record, also sitting 8% above the 5-year average.
In line with the herd rebuild and tighter supplies of grassfed cattle in the processor sector, grainfed cattle accounted for 56% of total beef production in Q1, a new record. So far in 2022, grainfed production has produced on average 50% of total beef produced in the country, 12% above the 10-year average.
Slaughter
In 2022, national cattle slaughter is expected to fall beyond last year’s 36-year low of 6,018m head, again, with weekly kill rates consistently lower than 2021. The average weekly slaughter figures in YTD terms have averaged 3% lower than 2021 and 23% lower than 2020 figures. Supply of cattle has continued to remain tight with the rebuild extending north into Queensland numbers of cattle fell further. While processors have been constrained by labour availability and a full workforce, this has also played a role, although cattle supply has been the major factor.
Prices
While the cattle market has generally experienced softer trends compared to the record breaking 2021 (other than the Studstock market for selling bulls), its performance has been very strong despite significant volatility.
A timeline of the Eastern Young Cattle Indicator’s (EYCI) performance:
- 24 January 2022: the EYCI reached its record of 1,191c/kg cwt
- This price was 453c/kg cwt or 61% higher than the 5-year average
- The price was also 97% or 586c/kg cwt higher than the 10-year average
- 1 February 2022: six industry analysts forecast in MLA’s annual projections release the EYCI would reach 998c by June 30 – the actual price was 1,013, a difference of 15c/kg cwt or 1.4%
- 10 June 2022: six industry analysts forecast in MLA’s June cattle projections release that the EYCI would reach 953c by December 31, with a lower limit of 856c – the actual price at present is 855c/kg cwt, firm on the lower limit projection with six selling days left in 2022
- 20 July 2022: the EYCI fell to what was then its yearly low of 885c/kg cwt as the market reacted intensely to multiple market drivers and concerns over exotic diseases
- 17 August 2022: the EYCI recovered all its losses over the exotic disease scare within five weeks and again passed 1,000c/kg cwt where it remained for another three months
- 16 November 2022: the EYCI falls below 1,000c as supply in the indicator reaches its highest throughput since April 2019, three and half years ago
- Throughout 2022 the EYCI has averaged 1,064c – this is 11% or 104c higher than the 2021 average of 960c/kg cwt.
In the west, the Western Young Cattle Indicator (WYCI) surpassed the EYCI’s performance and reached its own record of 1,222c/kg cwt on 4 May 2022. The WYCI’s price experienced intense volatility throughout 2022 as producers looked to retain stock to rebuild numbers and buyer demand fluctuated dependent as feeders dealt with challenging input cost price pressures and restockers became more selective on buying quality animals.
Attribute above content to: Ripley Atkinson, Senior Market Information Analyst
