Argentina: Cattle numbers decline, signaling a change in market trend

Based on the results of the third quarter of the year, animal supplies destined for slaughter appear to be showing the first trend reversal. However, it is not yet possible to determine whether we are witnessing genuine structural changes heralding the beginning of a holding period, or whether this is merely a temporary decline caused by the high market volatility in recent weeks and, in this context, the uncertainty inherent in the pre-election situation.

The truth is, the expected rate of animal dispatch to slaughterhouses has now been officially confirmed: 1,169,120 HEAD of cattle were slaughtered in September. While in absolute terms this figure is almost identical to the number of animals slaughtered in August, when calculated daily (taking into account the number of working days in each month), it represents a significant decline: 8.3% compared to the previous month and 7.7% compared to the previous year.

Indeed, this is the sharpest year-on-year decline in the past year, and given its scale, it may well indicate the beginning of a trend reversal, although it is premature to confirm this claim.

At the same time, an analysis of feedlot activity over the past month also reveals a slight slowdown in deliveries. According to SENASA, as of October 1, the total cattle inventory was 1,915,612 head, down 3% from the previous month. This marks the third consecutive month of depletion. Specifically, over the past month, a total of 337,100 head of cattle arrived at feedlots , while 442,442 head were finished, reflecting a replacement index of 0.76, very close to the August figure.

However, instead of consolidating the trend of resource depletion, where expenditure levels tend to rise more rapidly or revenues decline more sharply, September saw a slight decline in both revenues and expenditures, which can be interpreted as a sign of a dead end in this process.

This year, the natural dynamics of filling and emptying pens shows an advance of about a month compared not only to last year's curve, but also to historical behavior.

Depending on the season, September and October are typically months with high feedlot influxes, which then declines as the finishing phase progresses in November and December. This year, although September saw a significant influx of animals—approximately 442,000 head—it marked a downward trend compared to the average of 450,000 head recorded in the previous two months. This raises the question of whether the final quarter will follow the usual pattern.

Growing proposal

One variable that could undoubtedly influence the historical dynamics of penned animal management during this final period of the year is the role of pasture-fed cattle. As we observed throughout the year, there is a growing complementarity between pasture-fed cattle and penned cattle.

This year, of the 8.75 million calves that left nurseries by September, only 23% went directly to feedlots, compared to 24.5% and 25% in the previous two years. The rest were sent to other pastures by default.

At the same time, however, there has been a significant increase in the share of animals fattened in feedlots within the slaughterhouse, a trend that has been observed since last year. Between January and September, the share of feedlots in total slaughter volume increased from 33-34% in previous years to 36-37% over the past two years. Moreover, this share continued to rise in the final two months of this year, reaching 38-40% of the total.

Of the 8.75 million calves that left nurseries by September, only 23% went directly to feedlots, compared with 24.5% and 25% in the previous two years.

In particular, if farms do indeed house more animals in pasture-based systems, this could well become a supply channel for feedlots, allowing them to extend their operating period and provide more stable supplies in the coming months.

If this were the case, then, beyond the temporary situation that may have impacted activity in September (and which may still impact October), we would begin to observe a structural shift in production dynamics. This change would not only at least partially stabilize supply curves but also—in principle—allow for a transition over time to the production of heavier animals in a much more efficient and sustainable manner.

Although this hypothesis is still in its early stages of development, its first confirmation comes from recently published slaughter and production data, which show that even with a small reduction in slaughter volumes, the overall MEAT supply on the market can be maintained – and even increased.