Deluge of supply hits saleyards pre-harvest

close up of cattle in paddock- photo by Bri smith

Drier paddocks, and mixed enterprises looking to shift their limited labour towards focusing on harvesting crops has lead to a 33% surge in yardings this week. EYCI eligible yardings reached 15,000 head- the second highest since June this year, and young cattle prices held up. However, finished cattle prices buckled under the deluge of supply.

East Coast slaughter for the week ending 4th November, 2022 dipped 1% week on week to 91,238 head. The impetus behind the contraction came mostly from VIC, which recorded a 9% dip week on week, followed by NSW at 3%. This was offset by a 3% rise in QLD production.

The Eastern states Young Cattle Indicator (EYCI) sat stagnantly on its laurels this week, ending the week where it started, at at 1,019¢/kg cwt. Dalby steers traded at 1,029¢/kg cwt, while roma store steers moved at an average of 1,058¢/kg, and Wagga steers at 1,041/kg cwt. Eligible yardings stacked on another 6% rise, to just shy of 15,000 head- the second largest weekly yarding seen since June. Steady pricing while supply increased indicates that demand for young cattle is solid at present.

The Western Young Cattle Indicator (WYCI) advanced 45¢(5%) this week to close at 993¢/kg cwt. Average steer prices, however, fell back 3¢ to settle at 920ٕ¢/kg cwt, indicating that the increase in the vealer percentage to 872% was the main impetus behind the index.

MLA’s preliminary national yardings data indicates that there was a strong rush to the saleyards this week, with an extra 14,000 head coming to market, representing a 33% week on week rise. The trend was not isolated to just one state though, with QLD yardings increasing 36% to 26,000 head (which is the 3rd highest weekly total in the last six months) and NSW offerings increasing 5,000 head to reach 19,000 head- also a 36% increase. The driver has been drier weather creating better access to paddocks that were too wet to enter previously, and a focus by mixed farming enterprises on getting cattle marketing done before the grain harvest starts. Reports out of Dalby indicate that the strong supply this week provided buyers, particularly feedlots with ample choice, and the ability to avoid overweight, or out of specification cattle, leading to some price discounting going in in the top end of the feeder weight range.

Despite the stability shown by the EYCI against the onslaught of a yardings surge, most of the national indicators backtracked, with heavy steer prices falling 4% to 429¢/kg lwt, and feeder steer prices dipping 3% to 398¢/kg lwt.

The 90CL frozen cow price slipped back in US dollar terms last week, but remained relative static, only slipping back 3¢/kg in aussie dollar terms to 842¢/kg swt. Steiner reports that all eyes are on how Chinese beef import demand will react to global slowdowns, and that there is a discount currently existing in the market for forward delivery into Q1-23 on the expectation that higher volumes of south American product may land on US shores, and that Australian slaughter may pick up next year. As we reported earlier this week, recent data does seem to suggest that there is bit of a dark cloud of uncertainty over Asian beef demand currently, and China may be no exception.

Next week

On a 5 year average basis, there is often a steep ramp up in selling interest and yardings from here through December as well as some lifts in processor production through higher slaughter. In 2021 though, this did not happen however, with the driver being good pastoral conditions and restocking intent. This year is a bit of mixed bag, with good soil moisture, but some damaged pastures in some regions from far too much of a damp thing. 

As such, the early summer 2022 supply situation is probably likely to land somewhere in the middle; selling pressure will build, but more gently. Next week might prove to be another strong supply week as additional paddocks dry out, and more of the backlog gets moved; but the momentum probably won’t be sustained out to the end of the year.

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Data sources: MLA, Mecardo

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