Down, down, prices are still going down.

Cattle herd drover

Cattle markets continued to slide this week despite indications of lower supply with the EYCI clocking up a cumulative 116¢ or 10% fall over the course of June. Other specifications have also fared poorly, with Restocker steers and Vealers suffering the largest monthly falls.

Slaughter statistics for week ending 24th June, 2022 reflected a healthy uptick in east coast processor throughput of a 24% increase from the week prior, to 97,253 head. While slaughter numbers in VIC, TAS and SA were effectively stagnant, the increase in demand for finished cattle almost exclusively stemmed from NSW, where volumes increased 76% on the week prior to 19K head, offset by a 7% slide in QLD numbers.

Official yardings numbers for last week ending 24th June, were indicative of a 21% increase in supply to 46,101 head. If we look at our seasonal yardings chart on figure 1, it is apparent that not only was weekly saleyard cattle supply up 22% from the prior year, it was in the top 3 highest weeks for the year to date, and near breaching the 5 year average volume for this time of year.

Eligible yardings numbers for the EYCI and other national indicators were either flat, or fell compared to last week, with the exception of Restocker steers, which increased 22% week on week to 2472 head. This is suggestive that cattle supply was flat to softer this week.

Despite the 6% decrease in EYCI eligible supply this week, the inherent demand in the market was not sufficient to hold prices, with the EYCI falling back 39¢(4%) to settle the week at 1,014¢/kg cwt. 

Over in the west, the WYCI pushed up 50¢(5%) to 1076¢/kg cwt, with the vealer proportion falling from 65% to 55%. Demand in the west is clearly strong, as the index overcame the drag of higher yardings, and a lower proportion of premium priced vealers. Yearling steers traded in the west at 1074¢/kg cwt, up 67¢(7%) from the prior week, while heifers trailed at 929¢/kg cwt.

The National cattle indicators suffered another disappointing week of falls, with Processor Steer prices collecting the wooden spoon by clocking in a 5% price decrease for the week to 636¢/kg lwt.  Medium and Heavy steer prices held their ground.

The US frozen cow 90CL price slipped back 5¢ to 273¢US/lb, and lost 12¢(1%) in Aussie dollar terms, closing the week at 866¢/kg swt. Holidays are traditionally critical points of high demand in the USA, and July the 4th is one of the most loved – Independence Day.  Just like us on Australia day, many Americans crack out the BBQ.  However, US farm bureau estimates that food inflation in the US will make it 17% more expensive for the average American this year to host a BBQ, which could weigh on beef demand. Consider Table 4, which breaks out the current USA BBQ cost as $70 USD, or $101 AUD for a 10 person BBQ, and pegs beef to be among the hardest hit by inflation among the list of BBQ essentials.

The week ahead….

Demand has felt distinctly soft in the past month, and relatively high levels of supply compared to recent history have weighed on prices. The market seems to be trending towards continuing high supply, and lacklustre demand, so next week is unlikely to deliver much joy for producers.

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Data sources: US farm Bureau Federation, Bloomberg, Reuters, MLA, Mecardo

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