AUSTRALIAN cattle producers could expect a turnaround in prices by mid-2024 on the back of an American herd rebuild, producers were told at the Meat & Livestock Australia Update event held in Bendigo on Thursday.

MLA National Livestock Reporting Service operations manager Ripley Atkinson said the United States’ cattle herd liquidation followed by its rebuild would lead to reduced global supply and an improvement in domestic Australian prices for some cattle.

MLA analyst Ripley Atkinson addressing Thursday’s Updates event in Bendigo

Mr Atkinson said cattle prices are currently 16-24 percent below 10-year averages and MLA sees more upside to price, but only getting back to the 10-year average.

“Yes it is going to take some time, but there are the fundamentals there.”

Mr Atkinson said finished cattle — heavy steer and processor cow — and feeder prices are going to be the prices most influenced by the US going into a rebuild.

“The restocker market will continue to be influenced and driven by the weather conditions, both current and forecast and confidence at the producer level to run trade cattle or step back in to buy younger future breeders,” he said.

“The US herd dynamic will have a more important role to play for cattle that are going further down the supply chain and will ultimately with a 7 in 10 chance end up being exported.

“That’s where the supply and demand factors at play are going to drive price, not necessarily the restocker end of the market,” he said.

Mr Atkinson said the reduced beef production in the US did not mean that global demand would go down. He said with US cattle production is expected to go into ‘a rebuild’ next year when their season turns around fully, “that’s going to give us the opportunity to capitalise on that lower supply from them.”

He said it would mean Australia could get back into key beef markets that the US had taken when Australia’s prices were at record highs and the highest in the world.

“Demand isn’t necessarily going to change, if anything it will increase.”

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Mr Atkinson said the US cattle herd’s female kill rate is at a record high, although the overall weekly slaughter has fallen, and the American cow herd is at its lowest level since the 1960s.

“What that’s going to mean is that their rebuild — the time it takes to get numbers back up — will take a whole lot longer.

“So this situation is going to take them a long time to get back and the seasons have got to go with them as well,” he said.

This dynamic represented an opportunity for the Australian beef industry and cattle prices were expected to improve in 2024, he said.

“By mid next year we expect a turnaround.”

He said Australia’s cattle slaughter was expected to increase over the next three years, getting back to 7.6 million by 2024, with processors expected to handle this.

Mr Atkinsons said MLA is expecting a 17pc or 1.1 million head increase in total cattle slaughter in 2023 compared to last year to just under 7 million – 650,000 head below the 10-year average – and following on from what in 2021 and 2022 had consecutively the lowest annual slaughter rates in 37 and 38 years, respectively, and the lowest since the mid-80s as producers retained stock.

He said the carcase improvements that producers have made through genetics, and turning stock off faster at higher weights, are contributing heavily to the increase in beef production.

“Yes, slaughter is going to rise by about a million head, but we can’t understate how critical carcase weights are.

“We’re feeding more cattle which is contributing as well.”

He said Australia will slaughter more grass-fed cattle this year – in September 70pc of the cattle processed were grass-fed and 30pc grain-fed  — although lotfeeders will retain their relevance..

“That’s on a quarterly basis, the highest percentage of grass-fed production since 2015, which was when the herd was also at this size.”

Mr Atkinson said Australia’s cattle supply is the highest since 2014 at 28.7 million and nobody expected restocker heifers to get to 120c/kg in October.

He said prices were expected to come back and highlighted the importance of sliding demand, seasonal conditions and “pressuring prices” in lowering confidence and softening the market.

The herd on farms is also bigger than people realise and there was no necessity for producers to go into the market and compete to buy heifers to build breeding numbers, Mr Atkinson said. This had taken producer demand away as supply lifted, leaving processors and lotfeeders, contributing to current market levels. But he said recent rain has lifted restocker prices by nearly a dollar in a month.

“It shows you how quickly confidence can turn around.”

“Confidence is a major factor in driving this market as well.”

Mr Atkinson said although labour was still a constraint, the Australian beef processors are coping with the higher numbers – 10-25 percent increase in the weekly kill this year compared to last year.

“It equates to about 25,000 head extra that they are processing on average per week to what we were last year.”