The increase in the number of adult cattle going to slaughter this year, especially females, has led to the national herd number being adjusted downwards to a new record low of 25.5 million head.
The latest Meat & Livestock Australia cattle industry projections have shown female cattle slaughter numbers remain high at 54 per cent of the adult cattle slaughter for the year.
MLA senior market analyst Adam Cheetham said the excess turnoff of breeding stock and a poor outlook for rain had led them to revise the adult cattle slaughter for the year up to 8.4 million head, an increase of seven per cent on 2018.
The national herd forecast for the end of June 2020 has been adjusted lower to 25.5 million head
"Reflecting these higher slaughter levels in the second half of 2019, the national herd forecast for the end of June 2020 has been adjusted lower to 25.5 million head," Mr Cheetham said.
"With finished cattle supplies expected to tighten, and a reduction in the herd and number of calves born from 2017-19, beef production is highly unlikely to exceed 2019 levels over the next two years."
Senior market analyst for animal protein with Rabobank Angus Gidley-Baird said there were signs the high female kill, and the shrinking of the national herd, was having an impact already.
"In reading the numbers you can see that female numbers were up 18 percent for the year to date in August, and male slaughter was down five percent," he said.
"So if those numbers are down it would suggest that we've had lower breeder numbers or lower calving rates over the last couple of years.
"You couple that with the increased female slaughter this year to date, and it would suggest we're eating further into that breeding herd.
"The 60 million dollar question is how quickly can we rebuild it"
Young cattle prices stable
Mr Cheetham said young cattle prices had largely remained stable through winter, although weather variability had created a disparity between north and south, with prices in the south considerably stronger.
"The modest improvement in conditions in the south provides an indication of potential upside, with southern regions currently supporting the north," he said.
"On the upside, the demand for well finished cattle is showing considerable strength in the market, with prices improving this year and likely to find continued support."
China the driver in increased exports
As China continues to deal with the outbreak of African Swine Fever, its demand for alternative protein sources has seen it drive export demand.
Mr Cheetham said Australian beef exports had surged in 2019.
"In the first half of the year, Australia's total beef export value reached $6.8 billion, up 22 per cent on the same period in 2018," he said.
"Reflective of the sustained impact of African Swine Fever, Australian beef exports to China for the year to September were at 200,000 tonnes, up 73 per cent on 2018.
"Much of this growth has come from a 91 per cent increase in the volume of manufacturing beef, closely followed by blade which has increased 81 per cent.
"These cheaper cuts are an affordable pork substitute."
Mr Gidley-Baird said that increased Chinese demand could be expected for the year ahead, and maybe even longer.
"We saw out beef export numbers to China jump in July, and the average for the July, August, September numbers was around 120 per cent on last year.
"Even anecdotally, it sounds like that demand is just getting stronger.
"Obviously the safeguard figure that we reached in August isn't an issue and I think while we've got stuff available they'll continue to soak it up."
The story National herd size shrinking further: MLA Projection first appeared on Farm Online.