Drought in the US will put serious pressure on the Australian meat industry

A severe drought sweeping across much of the United States will have major repercussions for the Australian MEAT industry for at least next year, say Nutrien livestock personnel's recently completed tour of North America.

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

Due to severe drought, producers in large areas of the US South and West , many of which are key beef-producing regions, have run out of feed and water and are having to liquidate large parts of their herds. Trading activity in the barns and the scale of cattle transhumance in general have clearly shown how severe the impact of the drought on the US industry is now.

The two-week tour of feedlots, processing plants, commercial barns and other meat and livestock facilities was led by Nutrien WA livestock manager Leon Giglia.

A key takeaway from the tour was that while the Australian industry is currently struggling with a surge in U.S. beef exports to international markets, this will change over time as the U.S. industry is impacted by a major drawdown due to drought.

This is likely to help support Australian cattle prices in the coming years. Mr. Giglia said that the current circumstances in the US are similar to 2014-2015, which itself was seen as an episode of severe drought in the US.

Reports show US feedlot placements in June were the largest monthly in 11 years. The number of fattening cattle in July was 11.332 million heads, the second-highest number for a July ever recorded. The previous month was the absolute record of June.

Beef Central columnist Steve Kay, publisher of US Cattle Buyers' Weekly, recently reported that more than 45% of the US is currently suffering from drought, and many parts of the southwest are suffering from severe, extreme or exceptional drought.

“No state is worse off than Texas,” Mr. Kay said. “Officials say 2022 is already a record year for Texas, with more than 80 percent of the state suffering from drought most of the year. Comparisons are already being made to the 2011 US drought, and some believe this year could eclipse 2011 as the state's worst."

The USDA recently released the July Cattle Inventory Report showing the US cattle population (total adult cattle and calves) at 98.8 million HEAD, down 2% from last year. , and is the lowest since 2015, when it was 98.1 million heads.