Producers strapped in for the ride as the beef engine room shifts south

Southern NSW and Victoria are emerging as the nation’s beef processing powerhouse, sparking an insatiable hunger for cattle as the Australian herd moves into the rebuild phase. Southern Australia’s record female kill ratio of 67.4 per cent is the highest in 50 years resulting in a decimation of the southern beef herd. And most of those females are Angus with the breed comprising 73 per cent of the breeding herds across NSW, Victoria and South Australia. With a lack of Angus beef in the system, the price spread between flatback and Angus steers will widen, according to Wangaratta-based market analyst Simon Quilty, of Global AgriTrends. This in turn impacts on the 15 per cent increase in beef processing capacity in southern Australia. “The irony is we’ve lost the most cattle in the south, yet we’ve built the biggest processing capacity in Australia there, and they have to keep those plants full otherwise workers will be lost,” Mr Quilty said. “This has been a fundamental change in our processing systems with the south having more capacity than northern Australia. "Eventually we will see a growth in more feedlots along the Murray River as it doesn’t make sense transporting the animals from Queensland to Victoria.” Mr Quilty was a keynote speaker at the Pasture Agronomy Service conference in Wagga Wagga last week. Global AgriTrends has forecast the national cattle kill to be 8.5 million head for 2026 and falling to 7.2 million head in 2027 as the herd rebuild gains momentum. Compounding Australian supply has been the northern Australian floods and fires in the south with an estimated 105,000 cattle dead or missing. Although the Middle East consumes a mere three per cent of the Australia’s export beef, 23 per cent of Australian grain fed tenderloins are airfreighted to the Persian Gulf states. Mr Quilty believes Australian beef exporters will pivot in the short term, but the long term could prove challenging. “We are now coming into a period where we will see tightening of beef supplies within six months and continued strong demand, even with the uncertainty in the Middle East,” Mr Quilty said. He pointed to industry concerns around triggering the safeguard of the 2026 Chinese import quota of 205,000 tonnes by late April or early May may mean those cuts normally shipped to China, including shin, shank, brisket, top side, blade and chuck roll could be pivoted into Japan, Korea, Asia and North America. “China is our number one buyer of grain fed loins, importing 8947 last year, and those expensive cuts such as tenderloin and striploin cannot be as easily pivoted," Mr Quilty said. “Canada now has access to the Chinese market with 40 processing plants approved to supply 172,000 metric tonnes of beef but our estimates are more like 20,000 metric tonnes for this year. "The expectation is for the US to achieve trade access to China in May of 164,000 metric tonnes and is estimated to ship 60,000 metric tonnes. “This will equate to 80,000 tonnes from Canada and the USA that will be potentially diverted into China, leaving a hole in Japan and Korea to fill. “The only other country able to fill Japan and Korean markets with 80,000 metric tonnes is Australia at elevated prices.” With 55 per cent of Australia’s beef exports to China being grain fed, the domestic market has brought forward animals contracted for 150-200 days to a reduced 120 days on feed for an April/May shipment. The market is now paying a premium of heavy feeder steers of 450kg liveweight, able to be turned off quickly to China. Grain and grass-fed slaughter-ready cattle are expected to remain in strong demand due to their ability to be shipped quickly and the need to meet increased slaughter capacity in southern Australia. Liveweight cattle prices remain strong with feeder steers averaging 474 c/kg, heavy steers at 454c/kg, heifers 425c/kg, and cows at 409c/kg. Feeder steers are tipped to rise to 528c/kg liveweight in June and reach 535c/kg in November followed by a peak of 650c/kg in June/July, 2027, then fall to 536c/kg by October 2027. Current Angus feed steer prices of 510-515c/kg liveweight are forecast to reach 580c/kg by October/November and peak at 700c/kg in 2027. Heifers are expected to reach 482c/kg by November and then peak at 550c/kg in March/April 2027, falling to 473c/kg by spring 2027. “Beef prices in Australia are yet to meet the real highs off the back of the US herd being at a 74-year low and continued falling beef production. This will mean greater needs for the US domestic market and less product exported globally,” Mr Quilty said. “The expectation is another 20 per cent upside in cattle prices in America which flows through to high meat prices and better returns for Australia.” Mr Quilty predicts cattle prices to peak in June/July 2027 as the Australian market tracks the key metric of the US Choice boxed-beef cut-out value. “There will be a short term pull back on grain fed animals on feed but in the long term with backfilling of US markets demand growth still remains on track,” he said.

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