The April 2023 cattle prices report for Australia showed that cattle prices were expected to remain relatively stable after their steady decline in March. The Eastern Young Cattle Indicator (EYCI) was reported to be below 700c/kg for the first time since March 2020, marking a 37% decline compared to the previous year. This decline in cattle prices has largely been due to a rise in supply after over two years of herd rebuilding and the processing sector nearing full capacity. As of the end of March, weekly national slaughter had jumped to over 114,000 head, the highest weekly volume since December 2020. However, slaughter rates were expected to decline in April due to fewer working days for processors.
Additionally, beef exports saw a significant increase in March, jumping 40% month-on-month to just under 99,000 tonnes, the highest monthly volume since December 2019. South Korea and Japan both experienced strong growth in exports, with monthly rises of 49% and 23% respectively. Demand for Australian beef in China also increased in March due to an export ban on Brazilian beef following a BSE case detection. As a result, beef exports to China rose 59% month-on-month, marking the highest volume intake since May 2020. However, this boost for Australia might be temporary as trade between China and Brazil has now resumed.
Consumer meat prices in supermarkets started to decrease following the fall in cattle prices. The price of low-quality meat had fallen by $2/kg in the past month. However, due to a long period of high prices, consumption habits have changed, with consumers opting for cheaper cuts of meat. Premium cuts were reported to be a tough sell, leading to further price reductions to keep them moving in the market.
Despite the fall in cattle prices from $11/kg to $7/kg over the past six months, cattle prices remained well above the record lows from 2019. Australia's herd size has grown considerably in recent years, which has contributed to the decline in cattle prices. However, with herd numbers continuing to rise, cattle prices have come off their peak, but they are still historically high.
There are concerns about the possible development of El Niño later in the year, which can produce drier conditions and increase costs for farmers. This could potentially push the price of cattle down if farmers are forced to sell and there is an oversupply in the saleyards.
In terms of the butcher industry, butchers paid a lot to keep stocking their shops during the drought years when supply was very tight, and their margins were affected. With the drop in cattle prices, it was expected that butchers would gradually reduce the cost of the meat they sell.