Nutrien Ag Solutions cattle saleyard.

The feeder cattle market is riding a slippery slope, as high feed grain prices and strong cattle supply allow feeder buyers to test the lower limits. Some other markets are showing more stability now, with prices in balance with supply at least for the meantime.

The Eastern Young Cattle Indicator held its own, slipping just 2¢ over the week to 361¢/kg cwt. The indicator has tracked sideways over the last fortnight indicating that buyers are content with prices at these levels for the given supply. In the West young cattle remain at a large premium to the east. The Western Young Cattle Indicator gained 39¢ this week to 530¢/kg cwt.

Processor cow prices picked up 10¢ on the week prior, to reach 152¢/kg lwt, but remain 41¢ below the levels of a month ago. The fact that prices across most sale yard cattle types didn’t decline this week in the face of a 60% lift in throughput compared to the disrupted holiday week prior, is a good sign.

Selective feedlots and the anticipation of significant supply to come from northern New South Wales have allowed buyers to sit on their hands and drag down the northern feeder market. The Australian northern cattle feeder price reported by Argus fell to 234¢/kg this week, down from 242¢/kg cwt last week. While high feed costs are making the equation difficult for feedlots, good harvest progress is starting to ease new-season grain prices.

Feeder steers out of Queensland to Indonesia continue to face pressure. Nutrien has quoted feeder steers at $2.30 this week. At the end of June, these cattle were priced at $2.90 so the fall since then has been 21%. The price of heifers to Indonesia has experienced a similar decline, down 17% over the same period to end this week at $1.90. The NT Brahman market has shown more resilience with quotes unchanged over the last three months for most categories.

Conditions were fairly dry across the country this week, however southwestern Queensland and a patch of northwest Queensland received around to 25mm which can only help. Looking at the week ahead there is only significant rain on the forecast for pockets of Victoria, with the rest of Australia to remain dry.

The week ahead….

We will be watching to see how supply out of NSW in particular tracks in the weeks ahead, and whether prices find a base with more volume. Looking further into next year several favourable fundamentals are likely to help underpin the market, so those with confidence in their feedbase should assess trading opportunities.

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Data sources: MLA, Mecardo

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