Last week’s slaughter was up 24% year-on-year, but still just shy of the five-year average. That said, it was the second-largest weekly slaughter volume for the year-to-date, sitting just behind the week prior. This indicates supply is not dropping off in any way, especially as the long-term trend sees weekly slaughter increase in the coming weeks.
So, what about demand? Rabobank’s latest agribusiness outlook reminded us that cattle prices also drifted lower last winter through until August when producers gained enough confidence in the seasonal conditions to boost the market. They suggest all the El Nino chat is one thing putting downward pressure on cattle prices.
If we look at the Eastern Young Cattle Indicator this week (EYCI), it is in fact restockers that have driven the price up by about 5ȼ/kg to 568ȼ/kg. With no Wagga Wagga market because of the King’s Birthday holiday, Queensland yards Roma (store) and Dalby were the biggest contributors to the EYCI. Which is no doubt why restockers paid a 13ȼ/kg premium over feeders and processors for EYCI-eligible cattle this week.
The Feeder Steer price dropped to just shy of 306ȼ/kg live weight. According to Argus Meat and Livestock, the northern feeder price was further depressed by some October processor grid prices being released and being 10ȼ/kg lower than September prices, to 630ȼ/kg for 100-day grainfed cattle.
Furthermore, they don’t think processor prices will head in the other direction anytime soon, with plenty of supply availability. They also mention plenty of producers keen to go direct to lotfeeders to bypass volatile markets, but feeders not wanting to book up to far ahead in case buy-in prices drop even lower.
The national cow price did dip slightly, down about 1% to 355ȼ/kg cwt. The other main female price that Meat and Livestock Australia has drawn attention to this week is the restocker yearling heifer, which traded at a record 30% discount to the same category of steer in quarter two of this year. At 232ȼ/kg lwt it is close to 100ȼ/kg below steers currently, and 310ȼ/kg below its year-ago value.
The week ahead….
“Ain’t nothing doing” (as they say) in the cattle market in the short term, with the market looking like it will remain at the status quo for the time being. Restockers aren’t jumping into the market at this time of year when they’ve already built numbers up and there’s plenty of chatter about a dry spring. Feeders and processors are doing their darndest to make back some of the extra cash they’ve dished out in recent times.