A Dearth of Cattle Sends Beef Production Plummeting in Australia

Commodities & Futures
© Reuters.  A Dearth of Cattle Sends Beef Production Plummeting in Australia © Reuters. A Dearth of Cattle Sends Beef Production Plummeting in Australia

(Bloomberg) — Australia’s beef output plunged to the smallest since 2017 as farmers rushed to rebuild herds after rains eased years of severe drought.

Beef production in May tumbled a seasonally adjusted 8.4% from last year to 178,900 tons, according to Australian Bureau of Statistics data. The number of cattle slaughtered dropped by 12.5% on the year to 603,500 head. Both figures are the lowest since November 2017.

Plentiful rains earlier in the year encouraged farmers to add to livestock after the intense drought shrank herds in Australia. That’s created a shortage of cattle for slaughter and meat production, with the benchmark Eastern Young Cattle Indicator trading near a record high.

Still, analysts warn that prices cannot remain decoupled from the broader global economic downturn forever.

“We are left wondering how sustainable cattle prices really are in the midst of a global pandemic and what may be the worst recession since the Great Depression,” National Australia Bank (OTC:) said in a June report. “With prices moving in the opposite direction to local prices in our major competitors, prices will likely fall once restocker interest recedes.”

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