High stock numbers, lack of processor capacity weighing on livestock markets: Rabobank update

Beef Central, 03/10/2023

Australia’s cattle, sheep and goat markets are being impacted by very high production numbers, compounded by already large volumes of meat in congested supply chains, according to the latest update from agricultural analysts at Rabobank.


Although still a way off 2018 and 2019, Australia has recorded the highest female second quarter slaughter numbers since 2020 (up 26 per cent year on year).

Angus Gidley-Baird

This indicates that maybe the industry has moved through the whole herd-rebuild phase and producers are starting to make decisions about how many cattle they want on the ground at the moment, RaboResearch senior animal proteins analyst Angus Gidley-Baird said.

“While there’s been an increase in year-on-year cattle slaughter numbers for quarter two, they’re not at those record high levels we’ve seen in sheep meat (more below)”.

But, Mr Gidley-Baird said, rather than cattle-herd numbers, it was high volumes of stock already in the system and lack of “capacity” among processors that was having the biggest influence on the beef market.

He said global protein inventory levels are very high at the moment.

“In Japan – one of our largest markets – ‘beef in storage’ figures are 18 per cent higher than the five-year average, albeit starting to level out,” he said.

“Congestion in the supply chain, with large amounts of stock already in inventory, is one of the main things holding up the system at the moment for the beef market.

“So if we start to see volumes move through the system a lot quicker, it will give processors a degree of relief that there is a home for their beef to go to and they’ll start adding extra shifts to increase capacity.”

Mr Gidley-Baird said factors such as the lead up to Chinese Lunar New Year in early 2024, as well as a contraction in US beef production and exports, give promise beef supplies may soon begin to move more quickly through the global supply chain. For sheep, global demand will likely take longer to recover.

Though longer term, when global market demand returns, Australia will be well placed to service export demand for lamb and sheepmeat, Mr Gidley-Baird said.

“The way I am describing it is that it is a slighter brighter light at the end of a slightly shorter tunnel for the cattle industry compared to the sheep industry at the moment,” he said.


For the sheep sector particularly, there is effectively a “mountain of supply at the moment” following two “extremely good seasons” where plentiful rainfall and strong prices had seen a large rebuild of the national flock, RaboResearch associate analyst Edward McGeoch said in a recently-released podcast.

Edward McGeoch

And this supply is now flooding the market, with near-record volumes of lamb and sheep being ‘turned off’ for slaughter as drier seasonal conditions impact parts of the country. It’s a similar story with goat, where historically-high numbers are also hitting the market. And while cattle slaughter numbers have not reached the same near-record highs as sheep and goat, they had tracked 16 per cent up year-on-year for quarter two, Mr Gidley-Baird said in the podcast ‘Counting the numbers in the livestock market’ .

At the same time, Rabobank said, there are already high inventories of meat in the system, which still need to be cleared from the supply chain. Two key factors Two key factors are impacting the livestock markets at the moment, Mr Gidley-Baird said.

“The first is the numbers of livestock that are out there – in particular we think the number of sheep has been underestimated – and what that means in terms of the volumes that we’ve got coming into the market,” he said. “And the second is the volumes of stock already in the system.

“A lot of markets – particularly Asian markets – had bought up big through the end of last year and early this year, in the expectation of coming out of Covid and the recovery of food services and increased consumer expenditure.

“But a lot of those stocks have not been moved.

“The consumption recovery hasn’t eventuated due to poor economic growth, cost-of-living pressures leading to subdued consumer demand and lower-than-expected export growth. “So processors at the moment have got this mountain of livestock coming at them, which is trying to be forced into a very congested supply chain.”


Rabobank says Australia is estimated to have its largest sheep inventory in almost 20 years in 2023, with expectations of record lamb slaughter this year and higher slaughter weights, while mutton slaughter numbers are also up 68 per cent for the first half of the year.

Mr McGeoch said quarter one 2023 sheep slaughter numbers were up 54 per cent on the previous year, while quarter two numbers were up 85 per cent year on year (75 per cent above the five-year average).

“So it’s a huge number – the highest quarter two slaughter number we’ve seen in over 20 years, when quarter two is traditionally the time of the year when Australia on average has its lowest sheep slaughter numbers,” he said.

Mr McGeoch said these numbers signalled the sheep market was not getting the “traditional break” that would occur between the two lambing seasons which allows the market to “reset and run itself out of a bit of supply”.

“So we’re going from last year’s lambs at very high numbers into new season lambs at high numbers and the market is not getting any respite,” he said. Mr McGeoch said the high sheep numbers going to market in recent months had been exacerbated by the poorer seasonal conditions being seen in parts of the country – particularly in central to northern New South Wales.

“That said, these numbers of sheep are still not as high as what we saw hitting the market back in late 2018 and early 2019 when dry conditions were very severe,” he said.



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  1. GRAEME, 09/10/2023

    You can’t pick the rise any time soon

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