Australia's female cattle kill has reached record levels amid signs the shrinking national breeding herd is already impacting the number of male cattle going to market.
Between March and May the cow and heifer slaughter reached 58 per cent of total adult cattle slaughter for three consecutive months.
Meat & Livestock Australia is forecasting that the total Australian adult cattle slaughter for 2019 is going to increase three per cent year-on-year to 8.1 million head.
Rabobank senior protein analyst Angus Gidley-Baird said while the female kill figure was a worrying statistic, it was not a surprising one.
"You can't do much about it but yes we are definitely eating into the national herd," he said.
"That's the highest female kill that we've seen in over 20 years."
But what is just as worrying for Mr Gidley-Baird is the knock on effect of the female kill - the reduction in the number of male cattle going to slaughter.
"The number of male cattle slaughtered for the year to date up to May was down six per cent," he said.
"If you assume that all male cattle are sold at some point in their lives, and if we are selling six per cent less now than 12 months to two years ago, we have less females breeding those male cattle.
"So we are now at a point where we've got a declining herd inventory and we are further eating into that with the high proportion of females being slaughtered.
"We are at a a fairly unprecedented point [and] it's going to be a long slow rebuild."
MLA Senior market analyst Adam Cheetham said the national herd was estimated to have declined 7.3 per cent to 26 million head for the year ending June 2019, while estimated branding rates have also fallen.
Meat production unchanged
But while the female slaughter has increased, Mr Cheetham said production levels have remained unchanged.
"Elevated female slaughter and poor conditions have combined to drive average carcass weights lower so far this year to 282.5kg/head," Mr Cheetham said.
"Despite national slaughter being revised higher, the lower carcass weights have underpinned unchanged production levels at an estimated 2.3 million tonnes carcass weight, two per cent below the five-year average.
"On the upside, prices for finished cattle have improved this year and are likely to find continued support given an expected tightening of supply during the remainder of the year.
"This year has seen the largest premium between the heavy steer indicator and the Eastern Young Cattle Indicator in the last decade, and until seasonal conditions allow restockers to re-enter the market with confidence, the store market is unlikely to see any significant price corrections.
"However, if a solid break in conditions were to materialise, there is the potential for young cattle and productive female prices to experience significant increases."
Lot feeding critical
With high numbers of unfinished cattle and females going to slaughter, lot feeding has been critical in providing well finished animals to processors.
"[It] has been a critical link in the supply chain during the prolonged dry period.," Mr Cheetham said.
"The number of cattle on feed reached a new record in the March 2019 quarter and has remained above the 1.1 million head mark for the fourth consecutive quarter.
"This number is expected to remain high, given the challenges of finishing cattle on limited pasture reserves."
Exports still strong
Mr Cheetham said demand for Australian beef has remained robust this year, supported by a depreciating Australian dollar and rising demand from China.
"In the first half of the year, Australia's total beef exports increased 6 per cent and grainfed shipments reached record levels, Mr Cheetham said.
"However, coming up against some supply constraints in the second half of the year, 2019 exports are expected to finish the year steady at 1.13 million tonnes shipped weight.
"Dry conditions have also supported cattle exports, with total shipments up 19 per cent in the first half of 2019. Cattle shipments are forecast to finish 2019 at 1.15 million head, up 6 per cent year-on-year.
"Beyond the weather, factors such as exchange rates, production in the United States and cattle price movements, trade developments and demand from China will remain important price drivers for Australian beef."