By Simon Quilty, MLX
Analysis – Is this the worst drought in history?
This is a question that will be asked by many, farmers, meteorologists and climate experts and I don’t think there is any clear answer.
There are so many ways to measure severity but if female kills were the primary guide and based on 45 years of ABS data there has never been two consecutive months of 58% female kill as we have just had – the closest month and year has been June and July of 1998 when female ratio reached 55.9% and 55.6%.
The consequences will be felt for many years to come as the impact of the liquidation on herd rebuilding will be significant.
I had previously had my estimates an Australian herd size at 25.3 M head for next year due to the drought from a high of two years ago of 28.3 M head but with this unrelenting liquidation and the catastrophic losses (estimates of 350,000 head) of the floods in Northern QLD at the start of this year my thoughts are now closer to 24.8 million herd size or lower – levels we have not seen since 1994 and earlier.
I have written of the ramifications of plant closures, unsustainable debt levels and the impact on farmers with such depleted herds and the consequences of this drought on cattle prices going forward – there is no doubt it will take many more years than any other previous droughts for farmers to get back to where they once were.
The problem has been exacerbated by the liquidation of the Australian dairy herd at the same time – whereby high feed costs have crippled both industry’s and led to many farmers walking away from their farms.
In summary the finding in this report are:
- Female cattle kills for Australia in April remain above 58% of the total kill for the second consecutive month – the worst liquidation seen in at least 45 years
- Long term drought rainfall patterns have returned with good rain in Victoria in May bring these trends back on track – should these trends continue it will hopefully see a high rainfall southern winter and an extremely high rainfall northern wet season from Nov-March. These measurements are based on rainfall events over 118 years of data after extreme dry years similar to 2018 (10 events in total in 118 years).
- BOM continues to forecast a dry winter for the eastern states that could well extend into spring.
- Pasture conditions and available soil moisture are extremely poor in SE QLD and many parts of NSW and East Gippsland being real standouts.
- Slaughterings for QLD, NSW and VIC are all higher than last year even with last year being a drought year – QLD is 11% higher, NSW up 6% and VIC up 8% giving the net Australian slaughter (including all states) up 9%.
- The liquidation of each states herd reflects these high slaughter numbers with QLD female kill at 54.3%, NSW at 56.2% and VIC at 67.3% – it should be noted that VIC’s kill is high due to the exodus of dairy cows – each state being 8-10% higher than the 10 year average.
- With increased kills come increased production and beef shipments and if it was not for the growth in China in the few years prices received for Australian beef would be substantially lower. Australia’s global shipments in May were 105,489 MT which is high but not as high as last May whereby greater than 109,000 MT was shipped. Slaughterings are higher this year though shipments lower – two factors that impacted this is lower carcase weights due to poor feed conditions and also a late Easter this year in late April which may have influenced shipment data.
- China as a market receives 22% of Australia’s beef exports identical to the US, and with Korea at 13% and Japan 25% of market share – this is a healthy competitive global market which is price supportive for cattle prices going forward.