Outlook for Beef and Veal

The gross value of beef and veal production and live cattle exports is forecast to fall to $14.3 billion in 2023–24, down by 4% from an estimated record of $14.9 billion in 2022–23 (Figure 1.1). The falling production value reflects lower prices for cattle outweighing higher levels of production.

The average saleyard price of cattle is forecast to fall to 560 cents per kilogram in 2023–24, 15% lower than the average of 662 cents per kilogram in 2022–23. Falling cattle prices reflect the increased supply of cattle to saleyards as both a large cattle herd and drier seasonal conditions increase cattle turn-off. Beef and veal production is forecast to rise by 14% to 2,293 kilotonnes in 2023–24 as higher slaughter numbers more than offset lower cattle weights.

The forecast value of beef and veal production in 2023–24 is $0.4 billion lower than in the June Agricultural Commodities Report. A downwards adjustment to average saleyard prices for cattle – reflecting recent price data – has more than offset a small upwards revision in beef production.

The export value of Australian beef, veal and live cattle is forecast to increase to $12.1 billion in 2023–24, up 2% from $11.9 billion in 2022–23 (Figure 1.1). Higher export values are expected as increased export volumes outweigh lower export prices for both beef and live cattle. Drier seasonal conditions in Australia are expected to increase both cattle turn-off and beef production. This increase in supply is expected to lower export prices for Australian beef, however, strengthening demand from the United States and China is expected to moderate the decline in prices.

Figure 1.1 Gross value of annual beef and veal production and exports

Average saleyard prices for cattle are forecast to fall to 560 cents per kilogram in 2023–24, down 15% from 662 cents per kilogram in 2022–23, reflecting higher cattle supply in saleyards at the national level (Figure 1.3).

The expected onset of both El Niño conditions in the second half of 2023, and a positive Indian Ocean Dipole (IOD) event from August are expected to generate drier seasonal conditions across Australia (see Seasonal Conditions for more context). In 2023–24, drier conditions are expected to reduce pasture availability and increase supplementary feed prices. This is expected to reduce farm demand for cattle, raise turn-off rates, increase cattle supply in saleyards and lower saleyard prices. However, cattle saleyard prices are expected to remain above their long-term average, supported by strong global demand for Australian beef exports.

Saleyard prices in northern Australia continue to maintain a premium over southern Australia despite the recent implementation of export restrictions on Australian live cattle exports to Indonesia and Malaysia. Better pasture availability and a delayed start to the northern rebuilding cycle have supported restocker cattle demand in northern Australia, pushing northern cattle prices higher. Conversely, an outlook for significantly drier seasonal conditions have effectively ended restocking activity, placing downward pressure on southern cattle prices.

Most of northern Australia experienced a good wet season and above average rainfall from May to June, leading to good soil moisture and average pasture growth. Pasture health and availability remain high in the cattle regions of central and northern Queensland, the Northern Territory and northern Western Australia (Figure 1.2).

Figure 1.2 Total standing dry matter (TDSM) percentile, 31 July 2023

Australian beef export prices are forecast to fall as rising global beef supply – particularly from Australia and Brazil – outweighs stronger demand from China and the United States (Figure 1.3). Global beef prices are expected to fall by less than average Australian saleyard prices as growth in the supply of cattle to Australian saleyards is forecast to be larger than the growth in global beef supply. This difference is expected to benefit domestic processors as the price margin between the cattle they buy and the exported beef they sell increases. Comparatively higher global beef prices will likely incentivise Australian processors to focus on supplying the export market rather than the domestic market.

Nonetheless global beef prices are expected to remain elevated. The Russian Federation’s withdrawal from the Black Sea Grain Initiative is expected to keep grain input prices both elevated and volatile, increasing global production costs for grain-fed beef. This is expected to pressure beef producer margins and support global beef prices.

Figure 1.3 Australian average cattle saleyard price and export price

Australian beef and veal production volumes are forecast to rise by 14% to 2,293 kilotonnes (carcase weight) in 2023–24 as an increase in cattle slaughtered more than offsets lower cattle weights (Figure 1.4):

• Cattle slaughter is forecast to increase to 7.4 million head in 2023–24 (up by 18% from 6.3 million head in 2022–23). A larger Australian cattle herd and drier seasonal conditions are expected to increase cattle turn-off, increasing cattle slaughter and beef production. The Australian cattle herd is expected to increase to 26.3 million head in 2023–24 due to favourable conditions in Northern Australia. If realised, this would be the largest Australian cattle herd since 2014–15.
• Cattle slaughter weight is forecast to fall to an average of 307 kilograms per head in 2023–24 (down by 3% from 319 kilograms per head in 2022–23). Lower cattle weights are expected because of lower feed availability relative to 2022–23 and a higher proportion of female cattle being slaughtered. However, average cattle slaughter weights are expected to be the third highest on record after both 2021–22 and 2022–23.

Beef export volumes are expected to rise by 15% to 1,171 kilotonnes (shipped weight) in 2023–24 driven by increased domestic beef production (Figure 1.4).

Figure 1.4 Annual volume of Australian beef and veal production and exports

Slaughter capacity is not expected to constrain livestock slaughter during 2023–24 despite higher slaughter rates. Industry liaison conducted by ABARES ahead of the September Agricultural Commodities Report suggests that processors are operating near current capacity. However, if processor profitability and the cattle supply in saleyards remains strong, processors may need to increase slaughter capacity. Processors would likely achieve this by moving to double shifts or operating 6 days a week. However, industry liaison suggests that increasing slaughter capacity could potentially be delayed by labour constraints.

Live cattle export volumes to increase with lower domestic cattle prices

Live cattle export volumes are expected to increase by 27% to 750,000 head in 2023–24 as higher live feeder/slaughter cattle exports outweigh lower live breeder cattle exports:

• Live feeder/slaughter cattle exports are expected to increase to around 652,000 head in 2023–24 (up by 34% from 486,000 head in 2022–23). Falling Australian saleyard prices and shipping costs will reduce the price of live cattle exports and help support demand from key export partners such as Indonesia (assuming a timely resolution of recent export suspensions) and Vietnam. Several factors are expected to constrain further live feeder/slaughter export growth:
  • Demand from Indonesia remains subdued; consumers are spending less and trading down into cheaper products such as Indian buffalo meat and chilled products.
  • Export availability of animals in Northern Australia, particularly in the Northern Territory is relatively low. This is because the herd rebuild is still underway in Northern Australia following a strong wet season and many cattle have been moved further south over recent years. However, the recent wet conditions in northern Australia and drying conditions in southern Australia will incentivise producers to hold more heifers in northern Australia. This is expected to increase the availability of cattle for live export from the start of 2024.
  • Indonesia’s recent suspension on live cattle exports on 28 July 2023 from four major Australian exporting facilities is expected to weigh on the volume of live cattle exports in early 2023–24. However, as Australia remains free of Lumpy Skin Disease (LSD), this forecast assumes a timely resolution to export suspension that does not have a significant impact on Australia’s live cattle exports to Indonesia in 2023–24.
  • The Malaysian Government has also temporarily suspended all live cattle and buffalo exports from Australia. The decision will not greatly impact Australian live exports as Malaysia is a minor export destination (accounting for less than 2% of Australia’s live cattle exports in 2022–23).
• Live breeder cattle exports are expected to fall to around 98,000 head in 2023–24 (down by 7% from 105,000 head in 2022–23) reflecting lower Chinese demand. Live breeder cattle exports are predominantly live dairy breeder exports to China. An oversupply of milk in China has led to the culling of cattle and reduced China’s demand for live dairy breeder cattle from Australia. This is expected to outweigh the impact of New Zealand’s recent ban on live cattle exports by sea (see Dairy for more information).

World beef supply is expected to rise as increased production in Australia and Brazil outweigh a small decline in United States beef production:

• Australia is the world’s third largest beef exporter. As a result, the substantial increase in Australian beef production will contribute to higher global beef supply.
• Brazil’s beef production and exports are expected to increase slightly in 2023–24. Over the last decade, the volume of Brazilian beef available for export has increased significantly. Growing Chinese import demand, a strengthening Sino-Brazilian trade relationship, and a persistent depreciation of the Brazilian real has led to strong growth in export returns. This has incentivised more Brazilian beef to be exported rather than sold domestically, increasing global supply.
• United States beef production is expected fall in 2023–24 but remain historically high. The US herd rebuilding cycle is now expected to start in late 2024 or early 2025; this is expected to start tightening global beef supply from late 2023 as US slaughter rates start to fall. Herd destocking continues as parts of the central United States remain very dry. Although slaughter numbers have started to fall, this is most likely attributable to a smaller herd size. The proportion of female cattle in feedlots and being slaughtered remains high, signalling that the US herd remains in a destocking phase.

World demand for Australian beef is expected to remain relatively stable in 2023–24 as increased demand from China and the United States is offset by reduced demand in Japan and the Republic of Korea:

• China’s demand for Australian beef is expected to improve over 2023–24 following the relaxation of pandemic restrictions midway through 2022–23. Australian beef exports to China have been relatively strong recently despite China’s economic recovery losing momentum in recent months. Australia’s beef export volumes to China in March, April and May 2023 were the largest since May 2020 (Figure 1.5). Chinese beef importers appear to be becoming more price sensitive due to the challenging economic conditions; falling Australian beef export prices in 2023–24 expected to support strong Chinese demand.
• United States demand for Australian beef is also expected to rise slightly as US herd destocking continues, increasing US import demand. Australian beef exports to the United States have risen sharply over recent months (Figure 1.5); driven in part by a widening price gap between US and Australian lean grinding beef.
• Japan’s demand for Australian beef is expected decline slightly in 2023–24. Australian beef export volumes to Japan were relatively weak throughout 2022–23 and this is expected to continue into 2023–24 (Figure 1.5) with weaker household consumption. Japan’s cold store beef inventory has also steadily increased to record levels. Japan’s cold stores of imported beef are up to 30% higher year-on-year. This is expected to weigh on Japanese demand and limit inventory space for Australian beef exports.
• The Republic of Korea’s demand for Australian beef is expected to fall slightly in 2023–24. The country’s cattle herd is near historic highs. This herd is beginning a destocking phase, increasing beef production, and placing downward pressure on demand for Australian beef exports. Economic growth in the Republic of Korea has been below trend in 2023, weighing on consumer spending on products including beef. A survey conducted by the Korea Rural Economic Institute in January 2023 suggested imported beef consumption fell in 2022 in large part due to high beef prices.

Figure 1.5 Monthly volume of Australian beef and veal exports by destination

Biosecurity remains a key risk for the livestock industry

Foot-and-mouth disease and lumpy skin disease (LSD) have both been reported in Indonesia and other countries to Australia’s north. If introduced to Australia, these diseases would reduce market access for Australia’s exports and be extremely disruptive to Australia’s livestock industry. The Australian Government is continuing to work with industry and the Indonesian Government to develop and strengthen prevention and preparedness measures.

On 28 July 2023, the Indonesia’s Agriculture and Quarantine Agency (IAQA) advised the Australian Government’s Department of Agriculture, Fisheries and Forestry that LSD had been detected in 13 cattle exported from Australia to Indonesia. Although these cattle were imported from Australia, LSD was only detected some time after the cattle arrived in Indonesia where LSD has become endemic.

Following this detection, Indonesia suspended exports from four Australian export facilities. These four export facilities have previously accounted for a significant amount of Australia’s live cattle exports. This leaves 28 registered establishments that can export live cattle to Indonesia. This export suspension could have large implications for Australia’s live cattle industry if kept in place.

Furthermore, the Malaysian Government has suspended Australian live cattle exports citing LSD concerns and following Indonesia’s decision. While Malaysia’s decision in isolation will not greatly affect Australian live cattle exports as a minor export destination, if other countries follow suit, the implications could be larger.

The Australian Government has confirmed that LSD has never been detected in Australia, and Australia remains free of the disease. The Australian Government is working with Indonesian and Malaysian authorities to reassure them that all animals exported from Australia comply with all requirements, including being free of LSD.

Australia-UK Free Trade Agreement entered into force on 31 May 2023

The Australia-UK Free Trade Agreement (A-UKFTA) entered into force on 31 May 2023. The FTA will remove tariffs from over 99% of Australian goods. Tariff elimination periods vary by product, ranging from immediately upon entry into force to ten years.

This agreement is expected to benefit Australian beef exporters, providing immediate access to substantial duty-free transitional quotas for beef. Within 10 years, tariffs on all Australian agricultural goods will be completely eliminated.

Australia facing increased competition in key export markets

Australia’s competitors are gaining increased access to key markets for Australian livestock and livestock products.

On 22 March 2023, Japan relaxed restrictions on Canadian processed beef imports which had existed since the discovery of bovine spongiform encephalopathy (BSE) in Canada in 2003. In 2022, Canada was forecast to have been the world’s eighth-largest beef exporter, and Japan was Canada’s second largest beef export market in 2021. Japan’s relaxation of restrictions on Canadian processed beef could encourage other trade destinations such as China, the Republic of Korea and Taiwan to also relax beef trade restrictions.

The Brazilian and Indonesian Governments recently signed protocols that provide Brazilian exporters market access for live cattle into Indonesia. While Australia has exclusively supplied live cattle to Indonesia for over 30 years, record high cattle prices in Australia are incentivising Indonesian buyers to consider other markets. Increased market access for Brazil will increase the competition for Australian live cattle exports to Indonesia.

Brazil’s ability to export live cattle may be affected after a ruling by a Brazilian federal judge to ban all live cattle exports from Brazil. The ruling, currently nonbinding, will take effect if it is deemed legally compliant by a higher federal court and accepted by the Brazilian Government.