There is nothing like some early summer rain in the north to throw normal cattle supply trends into disarray. Cattle slaughter has tanked as rain has disrupted supply, and the fact that processors are cutting shifts is also instructive as to price direction.
It rained in October and there is more on the way. The supply squeeze is on in the north, not just in store cattle, but slaughter cattle as well. It’s impacting southern processors as well, who up until October were sourcing cheaper cattle out of the north, but they are no longer cheaper.
After hitting a spring peak of 147,660 head in mid-October, Meat and Livestock Australia’s (MLA) weekly cattle slaughter fell 11% in two weeks (figure 1). We need to remember that back in July a major Queensland cattle processor ceased providing data to MLA. This needs to be taken into account when comparing to earlier in the year, or previous years.
The October decline in cattle slaughter is unusual. Historically, cattle slaughter is at its strongest through the last three months of the year. If the second half of October is any indication, this year could see the three months be the tightest supply period.
Not surprisingly, it is Queensland that has seen supply tighten the most. Queensland cattle slaughter is down 17% from mid-October, NSW down 7% and Victoria just 1%. Queensland cattle slaughter hasn’t been this low in a non-public holiday week since April 2024.
Prices in the north have reacted strongly to the tighter supply of all cattle, but slaughter cattle in particular. Figure 2 shows the Queensland Heavy Steer gaining over 100¢/kg cwt in October and early November, to reach new record highs and pass the Victorian indicator.
Supply of heavy finished cattle has been tight in Victoria as the state recovers from drought. Heavy steer prices have been stuck at 900¢ for much of the winter and spring. Cheaper cattle out of the north helped maintain slaughter without pushing prices higher, but that has finished, and prices haven’t risen.
Weaker export beef prices (see last week’s article), and the cutting of processor shifts suggest finished cattle prices may have reached their limit.
It’s hard to see more slaughter cattle price upside without a move in export beef markets. This could be on the cards when export quotas reset in January, but there will be plenty of feeder cattle waiting for that.
Rain in Queensland has seen cattle supply tighten and slaughter rates fall heavily.
Slaughter cattle prices have responded by reaching new records in Queensland.
Prices for slaughter cattle will have trouble rising further without export market improvements.