Extreme rain to dampen market next week

Murray grey cattle and calves in green paddock

Prices for young cattle were overall subdued this week, as the influx of pent-up demand carried over from the holiday period dissipated. However, there are signs that the outlook for heavy cattle is strengthening, supported by a post-holiday recovery in slaughter.

East coast cattle slaughter last week made up for lost ground caused by the sudden materialisation of a one-off public holiday. Kill numbers increased 11% week on week to 85,812 head. Breaking down the activity by state, the VIC processing industry kicked back into gear, with numbers increasing 52% on the prior week. QLD numbers also lifted 10%, more than matching the VIC contribution to represent 48% of the total increment for the week. NSW slaughter backtracked 2% however.

While we can see that the final figures related to last week’s yardings revealed that there was 36% post holiday uplift to 44,481 head, Preliminary figures for this week from MLA indicate that last week’s spike was short lived.  The entire gain from last week was lost this week with a 10,000 head (21%) drop, back to around 36,000 head. QLD numbers dropped back by 10,000 yead alone compared to last week, while NSW yards throttled back slightly, however, VIC numbers have held at relatively high volumes of this time of year, at 6K head.

Despite the falling selling pressure at the yards in the overall market, it appears that there was some pent-up demand present last week too which was lost, while selling interest in young cattle increased overall. The result was that the Eastern States Young Cattle Indicator (EYCI) suffered a downward correction, losing 35¢(<3%) for the week, to settle at 1,039¢/kg cwt. Roma store and Dalby were the dominating influence in the index, at 33% and 28% respectively. Roma store yearling steers traded a massive 125¢/kg(10%) cheaper than the prior week, fetching and average of 1,092¢/kg cwt, There was no Wagga sale on Monday due to the NSW public holiday, while Dalby steers were priced at 1,052¢/kg cwt. Eligible yarding numbers were up slightly (6%) on last week, to 12,191 head.

Looking to the other side of the country, the Western Young Cattle Indicator (WYCI) rose 39¢(4%) this week, at 973¢/kg cwt, with the rise mainly fuelled by the vealer percentage rising to 52%. A promising sign for the market was that underlying steer prices staged a recovery in the background, up 75¢(8%) to 986¢/kg cwt. Eligible yardings, despite being down 15% for the week, continue to remain at elevated levels, at 487 head

The national indicators depicted a week of mostly weaker prices, with medium steers losing 9¢(2%) to settle at 452¢/kg lwt while feeder prices finished the week 5¢(1%) stronger to finish the week at 519¢/kg lwt. Heavy steer prices advanced 8¢(2%) to 464¢/kg lwt, despite the headwind of over 320 head yarded – the largest weekly volume on offer seen in the last four months.

The 90CL frozen cow price has continued to benefit from the weakening of the AUD against the US dollar that we saw come through last week. Last week’s latest price rose another 16¢/kg swt to 854¢/kg. In US dollar terms however, 90CL prices have been slipping, with a US4¢/lb (2%) decline being booked over the month of September to close at 250¢/lb. Steiner’s most recent take on the market indicates that overall, the US beef complex is coming under pressure, as supply from high slaughter, and competition from competing products such as chicken weigh on the market. Domestic US 90CL has dropped to the lowest level in over a year, while chicken breast prices have fallen over 57% in the last 3 months, proffering a much more price competitive alternative, and the almost certain prospect of a recession has set a frugal tone among animal protein buyers.

The week ahead….

We can probably expect some smaller offerings, and probably demand in the yards in the central NSW to southern regions as heavy rainfall impacts livestock transport logistics, which may lead to cancellations at some saleyards, as producers batten down their hatches to focus on monitoring their properties for storm and flood damage in some areas. We have seen in the past that natural disasters also tend to impact processors getting animals to their facilities, and and their staff getting to work, so the heavy rain could cause some dampening in finished cattle demand.

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Data sources: MLA, Mecardo

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