July 14, 2020

Australia's beef output plunges to lowest since 2017

The beef production of Australia plummets to the smallest since 2017 as farmers rushed to rebuild herds following rains that eased years of severe drought, according to Bloomberg.

Beef production in May tumbled a seasonally adjusted 8.4% from last year to 178,900 tonnes, 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 has 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 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."