Meat Prices Set to Increase as Drought Lowers Livestock Numbers

Australian agribusiness is struggling to meet strong global demand for meat while livestock numbers fall due to ongoing dry weather, leading to reduced production and rising consumer prices.

Following a difficult growing season, one of Australia's leading agribusiness firms reports that drought conditions across the southern regions have prompted farmers to sell cattle and sheep earlier than usual. This has led to smaller herds. Although higher livestock prices have helped partly offset the impact, lifting profits to $33.6 million over the past six months, the pressure on meat supply continues to intensify as overseas demand grows.

Prolonged dry weather in parts of South Australia and western Victoria is at the heart of the supply shortfall. At the same time, export markets such as Japan and South Korea remain strong buyers of Australian beef, pushing up sale-yard prices. Analysts point out that major global competitors like Brazil have fallen short this year which may turn even more international buyers toward Australia.

Despite this, the outlook is not straightforward. Cattle prices may remain steady or rise through 2025, but concerns are growing over whether local consumers can bear more price increases, particularly as broader cost-of-living pressures continue. While meat processors are currently enjoying healthy profit margins, the incentive to make rapid changes in the supply chain may be limited.

Elders, the agribusiness at the center of this situation, also reports reduced demand for crop protection products and rural supplies. This drop, also tied to the drought, has led to a $12 million decline in retail earnings. However, conditions have been more favorable in eastern Australia where wetter weather has helped buffer some of the impact.

The company is awaiting regulatory approval for its proposed $475 million acquisition of Delta Agribusiness. If approved, the deal could reshape access to rural supplies although Elders may need to sell overlapping assets to meet regulatory and competition concerns.

Source: Australian Financial Review, MLA, Rabobank, Paradigm Futures