The end of the financial year has not deterred producers from offloading stock this week, with yarding numbers holding firm at a touch over 43, 500 head. Last week’s slaughter also continued to rise, up 9% on the previous week and 25% on the same week in 2022.
For just the second week this year, slaughter rose just above the five-year average, and the weekly average for the year-to-date is now about 15% higher year on year. As we can see from the East Coast Cattle Slaughter chart, if slaughter continues the same trajectory as the five-year average (and there is little to indicate it won’t) then we will be well into spring before numbers soften.
Meat and Livestock Australia have highlighted that feeder buyers of Eastern Young Cattle Indicator eligible stock are now paying a premium to restockers. Last week was the first time this had occurred since February 2020. The premium reversal has continued this week, with feeders paying an extra 5¢/kg over restockers, despite paying nearly 15¢/kg less than they did the week prior. With restockers making up more than 50% of the EYCI purchases this week, it is no wonder the indicator found no reprieve, falling another 2% for the week. Vealer stock was hit particularly hard this week, with both steers and heifers down more than 30¢/kg week-on-week however they did only account for about 14% of the EYCI throughput.
Looking back to feeder prices, the national indicator lost the few cents it picked up last week, closing at 309¢/kg, a 7% fall for the month. The northern feeder price, according to Argus Meat & Livestock, has held firm at 326¢/kg for the third week in a row. This holding pattern is being supported by both demand and supply, with plenty of capacity left in the lot feeding system (only 85% full in the March quarter), but in turn no shortage of cattle at the moment. That said, there are reports that feeder-appropriate stock is getting thinner on the ground, which is part of the equation which has pushed that category back above restockers. Argus also noted this week that their Northern Feeder Steer Price has reached a record price spread to the US equivalent, with the domestic price averaging 351¢/kg in May, well below the 605¢/kg (Australian) the USDA fed steer average.
The cow price has returned to the same level it was a month ago, finding some support through a slightly lower supply. The heaviest 520kg plus category was trading at nearly 40¢/kg premium to the lighter cows, despite having more than double the numbers. The US imported beef market is also easing, as Australian supply continues to grow and food service in America has been slowing down.
Next week
Many areas have continued to receive plenty of rainfall this week, but it has done little to dampen the predictions of a dry spring to come. Until we get close enough for that to either eventuate or not, there won’t be much budging in the market in any positive direction in terms of restocker supply and demand.
Finished cattle are holding their own with export demand consistently on the up this year, but it will be interesting to see how Brazil’s access to China impacts that. The feeder market is the one to watch, as lot feeders take a punt on whether to fill up the pens now, or there will be more price relief for them to come yet.
The long-predicted slowdown in US beef production has seemingly come into play this year, and Australian beef is filling some of the production gaps. Total
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Feeders outpace competition to fill capacity
For just the second week this year, slaughter rose just above the five-year average, and the weekly average for the year-to-date is now about 15% higher year on year. As we can see from the East Coast Cattle Slaughter chart, if slaughter continues the same trajectory as the five-year average (and there is little to indicate it won’t) then we will be well into spring before numbers soften.
Meat and Livestock Australia have highlighted that feeder buyers of Eastern Young Cattle Indicator eligible stock are now paying a premium to restockers. Last week was the first time this had occurred since February 2020. The premium reversal has continued this week, with feeders paying an extra 5¢/kg over restockers, despite paying nearly 15¢/kg less than they did the week prior. With restockers making up more than 50% of the EYCI purchases this week, it is no wonder the indicator found no reprieve, falling another 2% for the week. Vealer stock was hit particularly hard this week, with both steers and heifers down more than 30¢/kg week-on-week however they did only account for about 14% of the EYCI throughput.
Looking back to feeder prices, the national indicator lost the few cents it picked up last week, closing at 309¢/kg, a 7% fall for the month. The northern feeder price, according to Argus Meat & Livestock, has held firm at 326¢/kg for the third week in a row. This holding pattern is being supported by both demand and supply, with plenty of capacity left in the lot feeding system (only 85% full in the March quarter), but in turn no shortage of cattle at the moment. That said, there are reports that feeder-appropriate stock is getting thinner on the ground, which is part of the equation which has pushed that category back above restockers. Argus also noted this week that their Northern Feeder Steer Price has reached a record price spread to the US equivalent, with the domestic price averaging 351¢/kg in May, well below the 605¢/kg (Australian) the USDA fed steer average.
The cow price has returned to the same level it was a month ago, finding some support through a slightly lower supply. The heaviest 520kg plus category was trading at nearly 40¢/kg premium to the lighter cows, despite having more than double the numbers. The US imported beef market is also easing, as Australian supply continues to grow and food service in America has been slowing down.
Next week
Many areas have continued to receive plenty of rainfall this week, but it has done little to dampen the predictions of a dry spring to come. Until we get close enough for that to either eventuate or not, there won’t be much budging in the market in any positive direction in terms of restocker supply and demand.
Finished cattle are holding their own with export demand consistently on the up this year, but it will be interesting to see how Brazil’s access to China impacts that. The feeder market is the one to watch, as lot feeders take a punt on whether to fill up the pens now, or there will be more price relief for them to come yet.
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Data sources: MLA, Steiner Consulting Group, Argus, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.