With October coming to an end, it’s usually a time of increasing cattle supply and slaughter rates. Historically, this ties in with weaker prices, but we’ve already seen that, so here we’ll look at prospects for slaughter and price as we move towards summer.
Cattle slaughter has been relatively strong this year. While week-to-week cattle slaughter rates can vary considerably, the trend shown in Figure 1 where it is consistently higher. Since mid-2022, average weekly slaughter rates have risen 57%.
After peaking in May and June, East Coast cattle slaughter slowed down into the winter. The recent long weekend in Queensland and NSW should be the last major interruption until we enter the silly season. Historically, November and December are either the strongest slaughter months or equal with June and July. The influx of cattle before the hot weather and processing interruptions kick in drives slaughter at this time of year.
Normal price seasonality has gone out the window somewhat in the last few years, but late spring and early summer are traditionally times of easing prices. That trend has borne out in the last month, with the Eastern Young Cattle Indicator (EYCI) losing 7% since mid-September. Figure 2 shows the recent decline in the EYCI hasn’t taken too much shine off the late winter price rise.
We can also see in Figure 2 the continued rise of the 90CL Frozen Cow export price, which has continued its march higher. The latest Steiner report on the Meat and Livestock Australia (MLA) website (see more here) outlines the issue the US is having with beef supply at the moment. Extremely tight local supply and record prices are being compounded by tariffs on Brazilian beef.
The results are good for Australian processors, who are enjoying record prices for manufacturing beef. The premium of the 90CL over the EYCI is very strong and should continue to support slaughter cattle prices in the face of increasing supply.
What does it mean?
Historical seasonality in the cattle market can be instructional, especially when the herd is strong, as it is at the moment. The events that can throw seasonality out the window are weather-related. November outlooks remain positive for those seeking rain, which can have a significant impact on young cattle prices at this time of year.
Key Points
- Cattle slaughter usually peaks in November, as cattle are turned off prior to summer.
- Recent weaker prices should find support on further increases in export prices.
- A wet November could override seasonal price trends, especially for young cattle.
Click on figure to expand
Click on figure to expand
Data sources: MLA, Steiner, Mecardo
