Australia’s pain has, in some ways, been NZ’s gain.
Large-scale culling of capital stock cows and ewes has left the country bereft of stock to process. This has slowed the amount of meat hitting export markets where it would otherwise compete with, and therefore knock down prices for NZ product.
According to Meat and Livestock Australia (MLA), the cattle herd is the smallest it’s been in almost 30 years at 24.6 million head, with the sheep flock estimated to have fallen to a record-low of 64m in 2020. With La Nina bringing frequent rains to the eastern states and farm gate prices strong, these figures are set to mark the low point from which the industry regrows.
The cattle herd was similarly low in 2016 and immediately rebound by 1.2m head the following year. Cattle values are much stronger this time around though, which will limit the speed of the rebuild as farmers look to capitalise on this market before it fades away. Restockers continue to underpin results at the sale yards, though feedlot buyers are cutting processors out of the heavier type cattle too. The Eastern Young Cattle Indicator – average for 200kg and heavier young cattle in 25 saleyards – has settled at AU$8.65-$8.90/kgCW since the back half of January, easily the highest on record.
MLA forecasts a 2% or 570,000 head growth in the national herd come the end of 2021.
The good news, from a NZ perspective, is that the cattle kill will stay very low in 2021. Herd rebuilding will syphon heifers out of the killing system and onto farms as breeding stock, taking tallies out of an already small base of calves born in the past two years or so. MLA estimates another 3% drop on slaughter numbers for the year. This has already become very obvious, with the average weekly kill at 112,000 head since mid-January, down 40,000 head on the five-year average.
However, the amount of beef actually produced is forecast to be a marginally higher. Extremely high cost of store stock, combined with low stocking rates and cheap supplementary feed costs, are going to push cattle buyers to kill at heavier weights to recuperate margins.
NZ might notice a tiny bit more competition on the lamb side of things through 2021. Improved on-farm conditions are pushing eastern states farmers ahead with sheep flock rebuilding too. The same cannot be said of the drier Western Australian regions though, with an estimated 2m sheep transported from there to the eastern states last year.
The quick turnaround of lambs from weaning to slaughter will lead to a faster recovery of lamb production compared to cattle. A mixture of higher lambing percentages, strong prices and fewer production issues are forecast to lift the national lamb kill by 4% or 800,000 head this year. This is still 1.7m or 8% lower than the five-year average.
Actual production may be a little higher than this too, based on the same factors as with cattle – high store prices, low feed costs and low stocking rates. Merinos account for a significant proportion of Australia’s sheep flock, and lower wool prices will likely see a movement away from these in place of meat breeds in the next year or two, which will likely push carcase weights up further in the short-term.