US cattle herd shrinks further; big potential for Aussie beef

The just-released January cattle inventory figures from the US National Agricultural Statistics Service shows just how intense the rancher rush to send to cows to slaughter has been over the past year as drought wiped out endless feed and crop paddocks.

Total cattle and calf numbers dropped another 3 per cent on already heavily-depleted January 2022 levels to sit at 89.3 million head.

Cows and heifers that have calved were at 38.3m, the lowest since the early 1960s.

Cattle on feed inventory took a 4pc drop and the estimated 2022 calf crop is down another 2pc on the - once again - very low level of the previous January.

Three years of drought-induced liquidation has seen the female slaughter ratio at its highest levels in decades but good winter rains and snow in parts of the country, and an improved outlook for 2023, is expected to see the dial start to turn.

There is certainly no declaration of the drought having broken yet and the latest US Drought Monitor report shows big swathes of mid and western cattle country still in severe to exceptional drought.

Meat & Livestock Australia analysts say it's likely cow-calf operators in the US will begin retaining stock to rebuild the minute they have sufficient rain to do so but it remains to be seen if the breeding stock will exist in sufficient numbers to recover quickly.

If not, the recovery will be very slow, and the US could potentially be a net beef importer for several years, MLA says.

Additionally, if the rains that do arrive this year in the States are not widespread enough, little overall rebuilding will occur.

Even if the swing back to herd rebuilding does occur this year as predicted by most commentators, MLA says production levels may take longer to recover than previous rebuilding phases.

US production has grown over the long term but the US herd has not - that growth has come from increased carcase weights, MLA points out.

ALSO READ:

Already the burger-loving US market is showing some promising signs as a hungrier customer for Australian beef this year.

Episode3 analyst Matt Dalgleish reports 8,953 tonnes were exported to the US during January, which is 32pc higher than the opening gambit in 2022 and the highest January trade volumes since 2020.

However, there is some catch-up to happen as current volumes are still about 20pc under the five-year average, he said.

Speaking in a cattle market webinar run by Agriculture Victoria, Mr Dalgleish said the high female slaughter rates had meant the availability of a lot of cheap beef in the US.

"For much of 2021 and the early half of last year, the Australian cattle market was running at a premium to the US, which is uncharacteristic, but now we've slid back to a discount and the US has powered on because they are getting less and less supply," he said.

The typical scenario is the Australian market runs at a 30pc discount to the US.

"But at some stages in recent years we were at a 15pc premium - which meant our beef was not competitive and that had implications on volumes going there," Mr Dalgleish said.

"With the decrease in cattle prices here so far in 2023 we are now close to those historical levels, giving more support to our export volumes."