Wave of beef to come but demand will soak it up

Meat & Livestock Australia's cattle industry projections for 2022 have production lifting 12 per cent this year to 2.08 million tonnes but reaching 2.44m tonnes by 2024.

That would be 32 per cent above what was produced last year.

The rise in production will also see export levels reach records by that time. This year, more than a million tonnes should be exported around the globe.

Rabobank modelling is suggesting a 13pc lift in slaughter numbers this year.

The bank's flagship annual Australian Agribusiness Outlook for 2022 said male slaughter numbers in the last quarter of 2021 showed the first year-on-year increase since the start of 2020.

Rabobank senior analyst for animal protein Angus Gidley-Baird said exports will lift this year in line with increased production.

"Volumes to the United States and China will remain subdued given the ongoing strong prices and limited supplies of lean trimmings," he said.

"However, volumes to Japan and South Korea are expected to lift."

ALSO SEE: How much capacity to send beef to China is left?

MLA's herd projection of 4pc growth this year to 27.2m head is a slight scaling back on what the big red meat body was predicting last year. That has been put down to conception and fertility impacts of drought still affecting northern production systems.

MLA's market information manager Steve Bignell, speaking at a cattle webinar last week, said while none of Australia was currently declared a technical drought based on Bureau of Meteorology data, the amounts of rain that have come in parts of Queensland were not enough to exit drought.

"That's a huge factor for the national herd rebuild," he said.

"In the Barkly and Gulf there is still an ability for capacity to increase and pasture growth to improve," he said.

In the past week, some areas through the Kimberley had over 600mm, demonstrating the strength of the current La Nina. The BOM expects the La Nina it to finish strongly.

"With 80pc of Queensland forecast to get above average rainfall, that will underpin a strong start to 2022," Mr Bignell said.

"Should the 2022 season not turn out that favourable, we can still rest assured it won't be as bad as 2018 or '19 because that good outlook for the next three months will mean there is water in dams, soil moisture, grass on the ground and grain."

Mr Bignell said it was statistically rare for three successive La Ninas to occur, although it did happen in the '70s and '90s.

ALSO IN BEEF: Tuck into tongue, offal is where it is at

NSW and Victoria, meanwhile, are entering their third successive year of above-average conditions.

MLA market information analyst Ripley Atkinson said yarding volumes last year for those two states painted a picture of rebuilding.

Victoria's cattle yardings fell 29pc or 109,000 head year-on-year, while NSW's fell 9pc or 57,000 head.

Although the age of the national breeding herd will be young due to the turnoff of cows during the drought, favourable reproductive conditions for young females are expected to counteract the challenge of joining first and second calving females.

"We are expecting supply to increase in the second half of this year on the back of the numbers of calves born in spring 2020 or autumn 2021," Mr Atkinson said.

"Female calves coming through have grown up under favourable seasonal conditions which will promote branding rates into the future."

Rabobank says that although increased cattle numbers will cause prices to ease, favourable seasons, strong consumer demand and ongoing short supply will keep prices historically strong.

The Eastern Young Cattle Indicator contracted only four times, on a monthly basis, in the past 24 months, Mr Gidley-Baird reported.

That makes this the longest and largest increase in the EYCI's history.

Rabobank is forecasting the market to set a new baseline price, stepping up from the average prices prior to 2015.

For all the big news in beef, sign up below to receive our Red Meat newsletter.