In search of a rebuild
The Snapshot
- The female slaughter ratio (FSR) for the September quarter is 53%, bringing the annual average FSR for 2020 to 53.7%.
- Queensland’s FSR is showing some movement towards levels that would indicate a rebuild phase has begun, but needs to be under 40% to really get the restocking momentum underway.
- The NSW and Victorian FSR aren’t showing any sign of moving into herd rebuild territory.
The Detail
The Australian Bureau of Statistics (ABS) have changed their reporting frequency for cattle slaughter from monthly to quarterly so we have been anxiously waiting the release of the September quarter figures to see if we are in a technical herd rebuild or not.
Despite the strong restocker premiums currently being achieved the female slaughter ratio (FSR), which measures the proportion of female cattle slaughtered as a percentage of total slaughter, remains above the 47% threshold which signifies if the herd is in rebuild or liquidation.
The September quarter FSR has come in at 53%, down 2.8 percentage points from the June FSR, but still well entrenched in herd liquidation territory.
On an annual average basis the FSR sits at 53.7%, the second highest annual level on record. Last season saw the annual average record FSR achieved at 56.0%. Prior to the last two years you would have to go back to 1998 to see an annual average FSR at these extremely high levels when it reached 52.1%.
Analysis of the FSR at a state level shows that Queensland is heading in the right direction for a herd rebuild, with the FSR dipping below the average seasonal trend to see it at 45.5% for the September quarter.
Due to the lower branding rates in the northern breeding system and less opportunity for active breeder management in many of the large pastoral properties in the north there is a lower proportion of females turned off compared to the southern breeding systems.
This means that the FSR threshold to signify if Queensland is rebuild phase is below 40%, compared to the national FSR threshold of 47%. So while the QLD FSR is much lower than the NSW and Victorian FSR it isn’t yet in rebuild territory.
Surprisingly, NSW has seen their state FSR creep up from 51.7% in the June quarter to 53.6%. This is somewhat perplexing given that NSW was hit the hardest in the most recent herd liquidation. During 2018/19 the national herd dropped by 6% compared to a 14% decline in NSW.
Victorian female cattle slaughter ratios remain stubbornly elevated. Indeed, the 2020 trend is running above the levels seen during 2019. The September FSR in Victoria has come in at 68.4%, down marginally from the 69.2% recorded in the June quarter, but still well above the normal seasonal range that could be expected for this area.