Australian Drought Leads To Massive Herd Liquidation, While Helping U.S. Beef Supplies

The Southern Great Plains saw substantial herd liquidation a few years ago, when the exceptional to extreme drought hit the region. With drought recovery in recent months, the region has started to see herd expansion. Rabobank livestock industry economist Don Close said now Australia is getting similar weather conditions seen in the U.S. in 2011, 2012 and 2013. 

 

 

“It has been absolutely phenomenal, the rate of liquidation that they have endured in Australia,” Close said. 

 

 

Australia has received some unexpected rains in recent weeks, that is very counter seasonal to the El Nino weather pattern. Close said that will buy livestock producers some time, but he forecasts that once the market starts to rebuild the price explosion in the Australian market will be even greater than what the U.S. saw in the 2014 cattle market.

 

 

“Just the rate of liquation that they have had in Australian in the last two and half years is going to be a huge, huge drain,” Close said. “It’s going to take years to rebuild the numbers once it does rain.”

 

 

With the strong beef prices in the United States, a lot of that Australian beef is being shipped and sold in the U.S.   As American producers continue to recover from the latest drought, Close said this is perfect timing as a large volume of the lean beef trimmings are being shipped to the U.S. This increase in Australian imports is helping offset the shortfall of U.S. beef supplies from the decline in slaughter cows. With herd expansion in the U.S. underway, having the lean beef supply from Australia is very timely for the U.S. ground beef supplies.