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Australia, New Zealand beef production to decline in 2020

Export volumes for both countries expected to decline due to the spread of COVID-19, specifically in China.

The U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) recently provide an update on Australia and New Zealand’s beef production in recent GAIN (Global Agricultural Information Network) reports.  According to the Livestock Marketing Information Center (LMIC), Australia is having the most dramatic adjustments in 2020 but New Zealand is also worth noting.

A sharp decline in Australia’s beef output this year is being caused by the cumulative impacts of a multi-year drought.

“Australia’s cattle numbers have already reached the lowest level in three decades,” FAS noted in the report, but added that increased precipitation may serve as a catalyst for herd rebuilding. This year, however, FAS forecasts Australian beef production will see a year-over-year decline of 14%.

FAS noted that exports typically account for nearly two-thirds of the country’s beef production but lower output means a “substantial tightening of exports.” Because of reduced slaughter and beef production, FAS forecasts beef exports will decline by 20% year over year.

LMIC reported that young cattle prices in Australia have increased dramatically over the last two months, which reflects restocking and growing Asian export markets.

Overall, FAS said the timing and extent of herd rebuilding will be highly dependent on further rains, boosting farmer’s confidence in sufficient availability of feed for their cattle.   

“Strong rains in some drought-hit areas in early 2020 were a positive sign for some producers, but further precipitation will be key.”

Regarding New Zealand, FAS relayed that beef production is forecast to fall by 5% in 2020, a result of lower expected slaughter and very dry weather in the North Island, which has reduced pasture growth and is expected to lower average carcass weights. FAS forecasts New Zealand’s production in 2020 will fall by 5% year over year, driven by a lower harvest and lighter carcass weights.

LMIC noted that cattle prices in New Zealand have been below a year ago, the opposite of Australia.

FAS relayed a second dominate issue for New Zealand is the swift elevation of China to the number one destination for its exports which has now “hit a bump in the road.”

“The spread of the coronavirus, Covid19, in China has stalled meat shipments and caused logistical delays.”

Currently, FAS is only forecasting a 1% decline in New Zealand’s beef export in 2020 compared to 2019.

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