Nutrien Ag Solutions cattle saleyard.

The start of 2023 has been marred by a huge fall in the EYCI- it’s not supply driven, as numbers are similar to when the markets closed in December 2022. Demand for young cattle, and restocking seems to have taken a hit- the question is whether it’s transitory, as buyers remain in holiday mode (which will correct in the coming weeks), it's apprehension or if the downward shift in value will prove to be more persistent.

Slaughter has made a good start to 2023 compared to 2022- East Coast slaughter for the week ending 6th January 2023 was double that which took place over the Christmas period in 2022. Compared to the first week of Jan 2022, processor throughput is up a healthy 24%; indicating at least some of the labour issues have been sorted out.

The EYCI has made an extremely poor start to 2023, losing 126¢(14%) in the first week of trade to close this week at 776¢/kg cwt. As usual, Roma Store was the top contributor to the index, but Gunnedah and Inverell snuck in as key influencers also this week, with similar yardings to the more usual suspects of Dalby and Dubbo.  Roma Steers were priced at 791/kg cwt, Gunnedah at 784¢/kg cwt, Inverell 789¢/kg Dalby at 774/kg cwt, and Dubbo at 771¢/kg cwt. Further south at Wagga, yearling steers were 860¢/kg.

The report at Roma Store is a source of encouragement- while many buyers were present and active, the assessment was that the lower price trend has a lot to do with poor quality offerings. Yearling steers for the feeder market have undoubtedly lost value, but good quality heifers and cows have held their ground. News from Gunnedah was less pleasing though- scant rainfall and higher temperatures over the holiday period had subdued demand from restockers and feedlots, though admittedly many buyers had not returned yet. Inverell reported good attendance by restockers, but, again, the interest was weighted towards good quality lines, particularly heifers. Further south in Wagga,NLRS reports suggested that buyer demand was weak, with little competition emerging for some lines.

A leading indicator of the sentiment for the year could be the southern weaner sales- as Angus reported earlier this week, prices have come in 30-40% lower than 2022, which isn’t a good omen for demand.

The Western Young Cattle Indicator (WYCI) rocketed up  93¢(12%) this week compared to the close last year to start the year to finsih the week at 891¢/kg cwt. The upward movement can all be traced back to vealers (weaners) dominating the index, at 97% of the 2,433 head offered. In contrast, the steer price weakened 42¢(6%) compared to last year, closing at 639¢/kg cwt.

Preliminary east coast yardings for the week ending 13th January, 2023 were down 2,708(10%) from December’s last sales. Selling interest this year has been stronger straight off the starting blocks, with 26% more cattle offered than the first week of January in 2022.

The national indicators were mostly deep in red territory, with restockers and feeders in particular pegging very disappointing numbers to start off the year. Restocked steers took the wooden spoon, with a brutal 87¢(15%) fall from the closing values of 2022, to finish the week at 482¢/kg lwt. Feeders also suffered, losing 31¢(7%) over the holiday period, to settle at 405¢/kg lwt. In contrast, Cow prices lifted 28¢(11%) against the trend, to reach 282¢/kg lwt.

The 90CL price lost 9¢(2%) last week, closing at 730¢/kg swt. AUD. Over the last month of the holiday period, US 90CL prices have dipped 3¢ (1%) per pound in US dollar terms. Steiner Consulting notes that Americans continue to treat themselves to quality beef cuts like prime ribs around the holiday period which hit prices 24% higher than a year ago. The expectation is that US beef demand will remain solid until the US unemployment increases by a significant factor. Australian processors are showing confidence in the US market through the post holiday stability of Aussie cow prices.

The week ahead….

The first week of cattle trading is always overshadowed by both buyers and sellers missing from the equation at the saleyards. Historically, yardings quickly ramp up in the later weeks of January, and this year, with rainfall petering out in some parts of the country, which generally encourages marketing activity, there is no reason not to see a repeat of that in 2023. The worry is that a lot of buyers seem to be present at the saleyards already, but seem to be biding their time. Recent speculation of a potential switch to a drier El-Nino weather pattern in 2023 is unlikely to give producers confidence.  A weaker price performance at the southern weaners sales last week is also indicative that the mood is one of caution among active buyers, so a strong rebound in price back to last year’s levels probably isn’t going to happen. Indications are that, so far, buyers have been quite selective, and that quality is paramount. 

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Note that our week in cattle table now shows the preliminary yardings figures for the current week- bear in mind that the numbers are not perfect, and likely to see some additions as data from later sales are added. 

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Click on graph to expand

Data sources: MLA, Steiner, Mecardo

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