Australian beef is hitting record production levels in 2026 and prices are holding strong, according to a new report from agribusiness bank Rabobank. The bank’s annual Australian Beef Seasonal Outlook 2026 says successive years of good seasonal conditions have allowed cattle inventory to rebuild to its next cyclical peak, pushing slaughter and production volumes to record highs. Despite the volume, strong global demand, particularly from the US, is keeping export prices and domestic cattle prices at historically high levels. RaboResearch senior animal proteins analyst Angus Gidley-Baird said, “This will generate record cattle slaughter and production volumes in 2026. Despite these record volumes, a strong global market is supporting record export prices and, in turn, historically high cattle prices, particularly for finished cattle.” The outlook for the rest of 2026 is cautiously positive, though a few pressure points are worth watching. Drought is the biggest risk Weekly slaughter numbers are sitting at around 160,000 head, creeping towards the historical high of 178,000 head recorded in 2014. Australia is close to maximum processing capacity, meaning a dry season forcing producers to offload stock quickly could strain the system significantly. Gidley-Baird said, “With high cattle inventory, dry seasonal conditions – like those conditions being experienced in parts of New South Wales – could force producers to sell stock rapidly into a market flush with cattle. Slaughter volumes are already at historically high levels, adding an additional 10 per cent to these levels as we have seen in previous drought conditions would test the capacity of the system.” China’s quota is almost full China is Australia’s second-largest market for grainfed beef. The 2026 import quota of 205,000 tonnes is expected to be reached as early as May or June, which may shift where processors are selling in the short term. A new quota year begins in January 2027, which could open up fresh demand for grainfed beef and lift feeder cattle demand from September 2026. Gidley-Baird said, “China is Australia’s second-largest market for grainfed beef behind the domestic market. The commencement of a new quota year in January 2027 may provide an opportunity for increased grainfed beef exports to China in Q1 2027, which in turn may mean an uplift in demand for feeder cattle in September/October 2026.” The Middle East conflict is adding costs Higher fuel and freight costs linked to the war in Iran are filtering through to supply chains, with Asian markets more exposed given their reliance on Middle East oil. These costs represent around 10 to 15 per cent of total farm operating costs, so the impact on farm budgets is real but limited. Rising interest rates are also adding pressure. Gidley-Baird said, “Higher fuel and freight costs may impact sourcing strategies for livestock buyers. Inflationary pressures may also impact consumer-spending patterns in export markets. Asian markets are possibly more exposed, given their higher reliance on Middle East oil supplies.” What it means for prices Heavy steer prices are expected to hold around AUD 4.50/kg live weight through the rest of 2026 and into 2027. Weaner cattle prices should sit around the five-year average of AUD 4-4.50/kg live weight, with little upside but some downside risk if conditions worsen. Gidley-Baird said, “Strong export markets and demand for finished cattle should help support demand for weaner cattle and store stock. But high cattle inventory and seasonal conditions are likely to mean there is little upside movement and prices are expected to hover around the five-year average – about AUD 4-4.50/kg lwt – with potential for downside movement.” Overall, most beef producers are expecting a stable year. A Rabobank survey conducted in February also found 54 per cent of producers expect incomes to stay the same in 2026, with 31 per cent expecting them to rise and 12 per cent expecting a decline. Gidley-Baird said, “The Q1 2026 Rabobank Rural Confidence Survey, conducted in February – prior to the Iran war – indicated that 54 per cent of Australian beef producers expect incomes to be the same, with 31 per cent expecting incomes to be higher and 12 per cent expecting incomes to be lower.” Find more food and drink news on Crumb Wire.