Latest cattle market update

At a glance

• Cattle prices fell after local supplies rose as January turned very hot and dry
• Rain in February across the north and into central and eastern areas of NSW has slowed numbers allowing prices to stabilise and begin rising again
• Our larger cattle herd has turnoff pushing up against processing and feedlot capacity, increasing the importance of fluctuations in local supplies
• Although international beef prices remain firm, local supply will be the key determinant of prices in coming months
• Tightening supplies of export weight cattle in the south will see southern processors head north looking for cattle to fill kill rosters, supporting slaughter cattle prices
• Seasonal conditions remain mixed with the north and parts of NSW looking for follow-up rain, but large parts of the south needing a strong, early autumn break
• Expansion in processing capacity and a shift in feeding to favour short-fed programs will aid slaughter and feeder cattle demand throughout 2025
• Restocker demand remains weak owing to seasonal conditions in the south and with many northern producers having already rebuilt herds.

After a strong start to the year, local cattle markets were overwhelmed by heavy supplies as a spell of very hot and dry January weather forced some producers to turnoff stock ahead of time. January saleyard markets saw large yardings of mixed quality cattle. Slaughter cattle categories faired best but they still gave up 20-25c/kg lw from their peak in the second week of January. Feeders and restocker cattle categories bore the brunt, shedding 25-30c/kg lw.

Falls in local cattle values came despite ongoing strong international demand for Australian beef with the US imported 90 chemical lean (CL) beef price gaining another 20c/kg over the same period, further expanding local processing margins.

US beef market leads the way

There were further modest gains in US beef prices during January, pushing US 90CL imported beef prices from Australia to record levels.

While local cattle values generally follow international beef price trends, heavy supplies and some herd downsizing, are meaning that local processors are not having to compete too hard for cattle with slaughter rates pushing up against the processing sectors kill capacity.

Australian processing sector struggling to expand capacity

The Australian processing industry’s kill capacity is still constrained by its ability to recruit, house and train staff. 

For example, JBS Dinmore was expecting to be killing at 3,300 head per day but has only reached 2,900 head per day due to staffing constraints.

Estimates were local processing capacity of 140,000-145,000 head/week (based on National Livestock Report Service statistics) would push towards 155,000 head/week in 2025.

A  similar scenario is unfolding in the feedlot sector. Feedlots are at operating at near full capacity and could not accommodate the surge in feeder supplies in the past month. However, a move back towards short-fed programs where feeding is more profitable should see demand for feeder cattle improve throughout 2025.

Mixed seasonal conditions see supplies increase

Mixed seasonal conditions have been at the forefront of the heavy turnoff in January. In the north, the latest ever start to the northern wet season has meant that some producers could not continue to hold stock after a hot January. A wet start to February has turned the season around and will allow producers to be more strategic with their cattle sales, with supplies slowing in recent weeks and prices recovering.

Central and eastern areas (NSW and Victoria) have been the beneficiaries of good summer rainfall, allowing the sowing of summer forage crops which should hold these areas in good stead heading into autumn and winter. Supplies from these areas should start to ease after large January yardings. 

In the south, central and western areas (SA, western Victoria and western NSW) remain dry with stock water becoming an issue for many which has contributed to heavy cattle supplies through January and February. 

The west is typically dry for this time of year but like some areas of the east coast, where rainfall was very much below average for the southern wet season, water for livestock is becoming an issue, particularly across southern areas along the South Coast and the Great Southern.

Prices recover as supplies ease

In the past few weeks, cattle values have stabilised as supplies eased. In the next month or so we should see supplies continue to ease, allowing a further recovery in cattle values. Already agents are reporting issues with sourcing cattle of weight across the south and producers are having little trouble obtaining kill space which is unusual this time of year. We expect southern processors to start heading north, earlier than usual in the next month, to source cattle to fill slaughter schedules post Easter. This will provide competition for northern processors and lead to a general appreciation in slaughter cattle values.

Restocker and feeder markets will be dictated by the season. A strong early break across the south will see southern producers become more active in restocker markets as they look to rebuild herds that have been downsized the past few years. The holding back of heifers will tighten feeder supplies and allow prices to rise as feedlots compete to keep pens full.

Local supplies will continue to be the dominant factor in determining prices in coming months

Since the drought of 2017-2020 the Australian cattle and beef industry has rebuilt a large, very efficient and integrated supply chain that is now challenging slaughter and production levels only previously achievable with significant herd liquidation.

While there is little industry consensus around actual cattle numbers - most think ABS and MLA have them too low – there is increasing evidence that herd sizes are pushing up against stocking rate limitations and current feedlot and processing capacity limitations.

Producers can’t carry any more (in the north), feedlots are struggling to accommodate feeder supplies, and the processing sector is struggling to handle slaughter cattle numbers. The industry has grown to such an extent and is so closely integrated that if an imbalance occurs then the ramifications are transmitted back down the supply chain.

What happens to prices in the next few months will be determined by seasonal conditions. Good, general widespread follow-up rain across the north and a strong, early autumn break in the south will see supplies ease, particularly in the south where producers will look to restock. This will see all classes of cattle appreciate as processors compete to fill slaughter schedules.

A dry autumn will see slaughter cattle prices firm to higher as southern processors are forced north for cattle while feeder and restocker markets may remain under pressure.

Heavy steer prices will move higher

US fed cattle prices have moved back below record levels in the past few weeks as Trump delayed imposing tariffs on Canada and Mexico. February’s US cattle on feed report, released this Friday, is likely to show lower placements as the ban on Mexico feeder cattle (recently lifted) washes through the production system. Placements of cattle into Texas feedlots were reportedly down around 15 pc in January.

Lower US cattle on feed numbers will see some easing in US feedlot beef production in 2025. This and a further improvement in demand from north Asia will support a rise in Australian heavy steer values throughout 2025. Also, a tightening in supplies of heavy weight cattle in southern Australia will see southern processors moving north to find cattle, providing increased processor competition and higher prices for heavy steers as the year progresses.

Cows likely to find strong demand

Prospects for gains in cow values look even better. Steiner is forecasting a further 7 pc fall in US cow slaughter on top of 15 pc decline in 2024 which will create further opportunities for Australian lean beef in the US market. Although larger exports from New Zealand and south America will limit the extent of further price rises, imported 90CL prices for Australian beef should be at least maintained at around current record levels.

US market to drive higher cow prices

Lower US lean beef production due to a further reduction in its cow kill will underpin strong international demand for Australian lean beef.

As cow availability tightens across southern areas, processors will be forced to compete harder to fill slaughter schedules. This should see cow prices rise, narrowing the wide gap currently between export beef prices and cow values.

Shift in composition of cattle on feed to support feeder prices

To enable the Australian industry to efficiently finish cattle from our larger herd size, the grassfed sector is reliant on the feedlot sector to accommodate increased numbers of feeder cattle. Although local feedlot capacity is building, it still seems it has a way to go to accommodate our larger herd size. The move towards long-fed wagyu programs in recent years has also constrained the number of feeders our feedlots can finish.

The recent sharp retraction in Australian feeder steer values at a time when international feeder steer prices are setting records is due to bottlenecks in our production system from a lack of feedlot space.