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Last week’s price falls may have put off some producers, as supply reduced, but not enough to counter the prevailing lacklustre sentiment of soft demand. The result was another week of steep price falls; with the cumulative impact over the last month really starting to add up

East Coast slaughter for the week ending 25th November, 2022 rose 33% week on week to 102,176 head, with processors picking up the pace in advance of the typical Christmas holiday shutdown. The kill rate this year has exceeded 2021 by 10%, but even at this level, it’s a light year, at 18% below the five year average.

The Eastern states Young Cattle Indicator (EYCI) fell 51¢(6%) week on week, closing at 876¢/kg cwt. In the space of just a month the index has now plummeted a total of 149¢(14.5%).

Roma Store, Dalby, Dubbo & Wagga collectively contributed 61% of the eligible saleyard volumes of the index, with Roma steer prices trading at a 9% premium to the EYCI at 954¢/kg cwt. In contrast, the Dubbo marketplace performed poorly, with yearling steers only fetching 824¢/kg cwt. The source of the weakness in Dubbo was down to quality, with large lines of poor condition, but well-bred cattle emanating from the west snapped up at discounted prices by feedlotters in attendance.

Overall, EYCI eligible yardings fell 10% week on week to 15,900 head. However, this level of supply is still relatively strong compared to where we have been over the last few months- as the average over the August to October period was only around 10,500 head. This means that in a relative sense, supply of young cattle is more than 50% stronger than recent history.

 The Western Young Cattle Indicator (WYCI) fell off a cliff, plummeting a whopping 156¢(<18%) this week to close at 870¢/kg cwt. The brutal fall occurred across all classes, with steers coming off 125¢(17%), and it was not supply related- the rush of WA weaners peaked last week, with eligible WYCI cattle yardings falling 39% week on week to 1,360 head. Reports out of Mt Barker and Muchea indicated that the price falls only contributed somewhat to the price falls, with soft demand for steers the main culprit; with buyers looking toward cows and very light pastoral heifers for restocking.

Preliminary yardings data for this week indicated that weekly supply came off around 21%, with yardings falling back to 43,000 head. QLD volumes fell back the most, with a 42% week on week drop, while selling interest increased only in VIC, where yardings jumped 38%. While producers reduced selling pressure this week, it was not enough to counteract the impact of softening demand, with prices weakening across the board for all specifications. 

All the national indicators fell this week, with both young cattle, and finished cattle bearing the brunt relatively equally. Medium steers and heavy steers both plunged 7% and 6% respectively, to settle at 392¢/lg lwt and 373¢/kg lwt respectively. Restocker steer prices also took a heavy hit, recording a 6% weekly drop, finishing up at 548¢/kg cwt.

The 90CL price remained frozen in US dollar terms last week, remaining at 240.0¢/lb and similarly, in Aussie dollars, the price was steady at 789¢/kg swt. Meanwhile in the US, Steiner’s report this week was one of slow trade due to the Thanksgiving holiday season. Q1-23 is not far away though, and some upside may exist in US markets if pastoral conditions improve and the cow slaughter rate falls back. The Aussie cow market tanked by 10% this week however, so, clearly, processors here aren’t showing much confidence in demand and prices rebounding right now.

The week ahead….

Marketing intentions are clearly strong, and with prices falling rapidly, it feels like many producers are keen to offload stock before the market falls much further. Equally, those in the buying space are likely to behave selectively and hold off on the expectation that cheaper prices might be around the corner. Until we see a small lift in the market indicating that there might be an upward correction, the problem of soft demand is unlikely to resolve itself anytime soon.

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Data sources: MLA, Steiner, Mecardo

Photo Credit: Ammie Bamfield

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