Devastating US drought has strong implications for Australian beef industry + VIDEO

 

Jon Condon, Beef Central (Australia)

28/07/2022

 

Extreme drought conditions sweeping large parts of the United States have serious implications for the Australian beef industry for at least the next year, participants in a recently-returned Nutrien livestock staff tour of North America found.

 

Eleven senior livestock personnel working for Nutrien and affiliated companies across Australia took part in the two-week tour, visiting key livestock and lotfeeding states including Kansas, Texas, Oklahoma and Colorado.

 

The tour was put off for two years due to COVID, but landed in the US at a time of extreme distress for the North American cattle industry.

 

As this colour-gradient map indicates, producers across large areas of southern and western US – many of them key beef-producing regions – have run out, or are running out of feed and water and are having to liquidate big chunks of their herds.

 

While drought conditions observed in the areas visited by the tour group were described as ‘nothing like that experienced in Australia,’ there were large areas where corn crops had either failed, or were at the point of failure. Sale barn activity and the extent of cattle movements in general clearly indicated how severe the drought impact currently is on the US industry.

 

The two-week tour, visiting feedlots, processing facilities, sale barns and other meat and livestock installations was led by Nutrien’s WA livestock manager Leon Giglia.

 

The key message to emerge out of the tour was that while the Australian industry is currently struggling against the sheer momentum in US beef being exported into international markets, that will change over time, as the US industry experiences the impact of significant herd decline due to drought liquidation.

 

That cycle is likely to help underpin cattle prices in Australia in coming years.

 

“On top of the bog cow liquidation, there’s been a wave of light-weight, early calves come onto the market in the US in the past ten days,” Mr Giglia said.

 

“Some may go into feedlots, but the price of corn in the US is now rising (due to drought), and the fact those lighter cattle will have to be fed longer, will; add greater production cost. And added to that, the backgrounding segment of the US industry (typically carried out on dedicated grazing properties) did not have the forage this year to fill its function in the grainfed beef supply chain.

 

“There’s pressure coming to bear on the whole US supply chain, as a result. It won’t be this year that their meat production system is hurt, but next year, when the inevitable cattle shortage occurs,” Mr Giglia said.

 

“Many of the sale barns we visited are probably yarding another 50-60pc more cows than what they did earlier.”

 

“One would think that Australia still has some pain to get through this spring, due to the abundance of US beef on the market, but come autumn next year, we should start seeing some flow-on, based on what we’ve seen this month.”

 

Mr Giglia said the current circumstances in the US were similar to 2014-15, which itself was regarded as a severe drought episode in the US.

 

“It’s just another cycle, their second in the past decade,” he said.

 

US feedlots at record levels ...

 

Carcases like ‘peas in a pod’ ... 

 

‘Tsunami’ of US beef on world markets ...

 

Contrast on either side of the Pacific ...

 

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