Cattle market steers clear of further falls

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After surging last week, producers pulled back the supply reigns, leading to a decline in yardings this week. This halt in supply put a stop to the price slide observed over the past few weeks. Preliminary figures from the MLA indicate that total yardings were down by 37% compared to the previous week, with most major saleyards experiencing reduced throughput.

In the eastern region, young cattle prices remained steady throughout the week, holding at 628¢/kg cwt. Conversely, in the west, young cattle prices improved by 20 cents, reaching 432 ¢/kg cwt. These prices have remained within a trading range of 100 cents since October.

Processor cow prices displayed little movement this week after steep declines the previous week. The national indicator increased by just 2¢ compared to the previous week. Cows are currently sitting at 234¢/kg lwt, reflecting a decline of 47¢ year-on-year. The 90CL US imported beef market has shown some stabilisation after four weeks of rapid price increases. While there is an anticipation of ample lean beef supply from Australia and New Zealand in the short term, the US is expected to exhaust its import quota that’s available from Brazil by the end of February, which will limit its supply options.

The northern feeder market shifted in favour of feedlots this week according to Argus reports. Some panic selling was noted however, without the widespread concerns of feed availability, producers are likely to hold on should the market get too cheap.

While slaughter rates remain below the peak levels seen at the end of 2023, they are tracking above the five-year average. In the week ending February 16th, cattle slaughter in the eastern states reached 121,740 head, marking a 36% increase compared to the previous year and a 9% rise above the average. Year-to-date, slaughter rates have been 14% higher than the same period last year and 4% above the five-year average. Typically, slaughter rates tend to remain relatively steady during February and March. 

Next week

The current forecast predicts upcoming weeks of wet weather for the northern region and much of Queensland, potentially causing disruptions in the flow of cattle from that area. It appears that kill-ready cattle prices are holding back the market at this point.

If we do see demand side improvement for beef in March or the wet conditions disrupt cattle supply further, there may be some upside to be found. Until then, the favourable conditions are expected to support a floor in the market and prevent significant downside risk.

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Data sources: MLA, Argus, Steiner, Mecardo

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