Climate impacts on producer decisions and market outcomes

Weather extremes over the past 12 months have significantly impacted producer decision making as well as production and price variability. The rainfall outcomes, or lack thereof, have influenced two conflicting seasons – a positive northern system and continued dry weather across southern Australia.These extreme weather conditions have provided an opportunity for insights into the short- and long-term impacts of climate and weather events. Despite these extremes, the complementary flow of stock and destocking in the southern system, which has flowed through to growth in the north, has supported positive market outcomes. The regional impact of herd and flock growth/destocking, however, is yet to be realised.

The impact of weather on both on- and off-farm decision drivers

Weather directly influences feed availability, pasture conditions and water access − all of which are critical to livestock management. Findings from the Meat & Livestock Australia (MLA) and Australiana Wool Innovation (AWI) Sheep Producers Intentions Survey (SPIS) show seasonal conditions remain the most cited external driver of production decisions. The proportion of producers naming weather as a top concern rose from 31% in 2023 to 50% in 2025, as many faced disruptive events such as floods, droughts and cyclones.

In real time, producers must manage the on-farm capability of carrying stock, while considering the longer-term outlook and rebuilding capability. Decisions to supplementary feed or destock in an often volatile livestock market are not only financially taxing but also carry mental and strategic burdens.

Moreover, an increased focus on weather risk can lead to a deprioritisation of long-term growth strategies such as infrastructure upgrades, genetic improvements or pest and disease management. These trade-offs may safeguard short-term business health but risk stalling both individual enterprise and broader industry advancement.

Longer term production and market variability

Climate variability plays a powerful role in shaping supply cycles and, therefore, livestock prices. Widespread drought typically leads to elevated slaughter rates, which increases short-term supply and depresses prices. However, the subsequent reduction in the herd or flock may lead to supply shortages in future years, causing price spikes.

Over the last two decades, cattle and sheep production volumes have demonstrated alignment with seasonal weather cycles and corresponding market shifts. Production spikes in 2015, 2019 and 2024 – which were dry years – correlate with significant dips in the Consumer Price Index (CPI)-adjusted National Young Cattle Indicator (NYCI).

This boom-bust cycle, tied to seasonal conditions, creates challenges for processors, exporters and retailers who seek consistency in volumes and pricing. These market inconsistencies then flow through to producers. While producers can adopt methods to balance seasonal variability, they still tend to be impacted by the cyclicity of the market.

Long term correlation of quarterly young cattle prices and beef production .