Livestock markets are operating within the bounds of historical variation

Slaughter of cattle and sheep remains within the range observed over the past 20 years and prices remain high by historical standards. It is likely that overall cattle and sheep numbers will decline as a result of this drought, however these are likely to increase shortly thereafter, as in previous droughts.

Relatively little change in livestock markets despite a period of limited pasture growth suggests that many livestock producers in south-eastern Australia have so far opted to use supplementary feed to balance energy requirements, rather than selling stock for slaughter.

There are three reasons for this:

  1. Prices for sheep and cattle are high by historical standards, and much higher than in previous droughts such as 2002-03 and 2006-07 (figures 4 and 5), which means that feeding stock has been profitable in many cases.
  2. On-farm supplies of feed and fodder were relatively high and feed and fodder prices were low going into the drought (figures 8 and 9). This drought follows several years with favourable conditions for crop and pasture growth.
  3. Many farmers are expecting livestock prices to increase when conditions improve and do not want to be exposed to the cost and risk associated with buying relatively high-priced cattle in future years.

It is also likely that many sheep and cattle have been  moved from the most affected farms in northern New South Wales to regions where conditions are better, such as south-east Queensland, southern New South Wales and Victoria. Cattle numbers in feedlots are at all -time highs. In previous droughts, such movements of cattle were somewhat less feasible because poor conditions were more widespread, and feedlot capacities were lower.

 

 

Source: http://www.agriculture.gov.au/abares/Documents/abares-insights-analysis-2018-drought.pdf