Beef buoyant as producers prepare for super spring

By Stuart Davies, McGrath Rural

Cattle prices are on the rise and a wet winter is hopefully setting NSW beef producers up for a superb spring. Beef exports have reached record highs in recent months, and strong domestic herd numbers continue to support these high volumes. The annual value of beef, veal and live cattle production is forecast to rise 9% in 2024-25, to $14.7 billion, as growing demand is expected to outpace increasing supply. Put all this together, and the positivity in the beef cattle industry is palpable once again. 

A substantial drop in returns over the second half of 2023, teamed with higher input costs and then for many a drier than average autumn meant it has been a tough 12 months for cattle farmers - but they are well used to tough conditions. Significant rain across a bulk of NSW and growing demand for beef internationally has things improving quickly, however, with some price indicators up as much as 30% in July and producers now more confident about what is in front of them. 

Feeder steers in NSW are attracting about 385c/kg live weight currently, while heavy steers are trading at 360c/kg. These prices are significantly higher than year-ago levels, and average saleyard prices for cattle have been forecast by the Australian Bureau of Statistics to lift by 18% for the coming year. The Eastern States Young Cattle Indicator, one of the most followed price points for how the market is faring in the east, lifted 12% last month, and all signs point to prices being supported at this level through spring and into summer. 

Australia produced 1.9 million tonnes of beef last year, and with nearly 20% of the herd residing in NSW, much of that came from here. That volume is expected to rise to 2.45 million tonnes this year, as the national herd has reached a maintenance phase. This comes after several consecutive outstanding seasons saw numbers build back up from the lows of the 2018-19 drought. Sitting at just above 28 million head, supply is now placing producers in good stead to fill orders. The beef industry’s contribution to Australia’s GDP rose nearly 50% between 2021 and 2023, proving its high worth to our local economy. 

Cattle being finished in feedlots have been at record highs for the past 12 months, and the growth of that sector is opening more doors in the industry both when it comes to production and sustainability. With more than 70% of all beef produced in Australia last year exported overseas, the global protein trade plays an important role in our industry, and we definitely hit above our weight when it comes to our input into that trade. This year, Australia’s high herd numbers means we have been exporting record amounts of beef, with volumes 19% above the five-year-average for the first half of the year. 

This is in part down to the US, which has emerged as Australia’s biggest beef market this year, and where we’ve sent about 43% more product compared to 2023. Following an extended period of drought and cattle turnoff, the US has reached its lowest herd numbers in more than 70 years and female slaughter has fallen 7% for the first half of the year. Lower female slaughter means less lean beef production, a vital ingredient in America’s fast food hamburger market which makes up the biggest portion of Australian beef headed to the US. As US slaughter continues to fall, the market will also open up further for higher quality cuts. 

As well as the US importing 12% more beef this year, they will export 8% less beef, creating even more opportunities for Australian beef in the global market - such as one of our other major markets, Japan. Beef exports to Japan were 33% year-on-year for the January to June period. Australia’s growing Wagyu herd is an important asset for this market. Gina Rhinehart of Hancock Prospecting, Australia’s richest person, has one of the largest herds in Australia with over 12,000 head of Wagyu cattle. She has recently diverged about $200 million worth of the S.K Kidman & Co cattle stations to reinvest in cattle country on the east coast and focus on the Wagyu herd. This is a clear recognition of the strong domestic restaurant market and export market into Japan, that a business person of her elk would invest so heavily in Wagyu. 

On the flip side of that is another large export market, in fact still our biggest combined red meat destination, China. When our relationship is going well with China, like it is currently, it is a huge benefit to the industry, however it can be a more fickle trade partner. A change in sentiment from one of your largest export buyers can mean they turn off the tap, and that can have a big impact in a very short space of time. However the China-Australia Free Trade Agreement, much like our FTAs with Korea, Japan, the US and the UK, is a good buffer for potential conflict and slowing down of trade. 

As is our reputation world wide as being clean and green with traceability from paddock to plate, underpinned by our second-to-none processes such the National Livestock Identification System and the Livestock Production Assurance system. We also now have the Australian Beef Sustainability Framework, with carbon footprint reduction and lowering of greenhouse gas emissions a real focus for industry, through improving things such as feed efficiency and pasture management. The latest ABSF update found more than half of all beef producers are either generating renewable energy on-farm or purchasing it, and more than 80% or adopting practices to improve soil water retention. 

This sustainability focus is particularly important because the constant hurdle for beef producers of course is Australia’s climate variability. While the season is treating most of the eastern seaboard well, the impact of the next drought is always on the back of producer’s minds. We’ve seen it have a significant impact on national herd size and the trickle down effect to the individual farmer and the prices they are receiving for stock. And as pasture availability decreases as does the cattle price, while the cost of feed and inputs head in the other direction. But each event - whether it be drought, flood or market demise - sees our resilience to changing conditions grow, and proves the durability of Aussie beef. 

Spring traditionally brings with it additional listings on the rural property market, and throughout our network this is already evident this year. On the back of good prices on farm and in the saleyards for beef, as well as sheep and lamb, the renewed confidence should parlay into a strong season for property sales, where we will see family farms expanding their footprint, and always the corporates out there looking for the opportunity to value add to their existing operations.

We will host our inaugural McGrath Rural auction event in Sydney on November 1, highlighting the best of what we have to offer this spring. Rural property prices have continued to rise over the past five years, which has seen some properties sell in a relatively short amount of time, and delivered significant capital gain without any notable change of inputs or management, allowing producers to increase their individual scale.