Cattle in a field with Nutrien Ag Solutions agent looking after them.

It’s heartening to see another consecutively positive week on cattle markets, but I’ll make no bones about it- we are seeing price increases because stock is being held back from the market, and the fundamental demand situation may not have changed. Sadly, the wins made in the last couple weeks look like they were made with the aid of a significant handicap- low yardings.

Slaughter number have continued to hold relatively firm at 6% above last years levels, with slaughter figures for the week ending the 5th August, 2022 only slipping back 1% to 89,195 head (figure 1). Amongst the states though, there was a bit of a shuffle going on, with QLD numbers falling 2.5%, while VIC rose 3%.

EYCI Eligible yardings dived 32% this week down to 6,071 head, and it has to be emphasised that it’s the lowest volume recorded in the last couple months by a margin of 20%; even including weeks where severe weather kept stock out of key saleyards across QLD and NSW back in early July. Across the specifications, eligible yardings are down, with restocker numbers down 33% and feeder volumes down 24% week on week. It’s not isolated to young cattle either, with cow volumes tracking at only 1052 head- a level that is over 70% down on the peak seen in late July, when the price falls were at their worst.

Are yardings this low even remotely normal at this time of year? Looking at figure 2, we can see that last week’s volume of 27,688 head is 36% below last year and this kind of dip is definitely not in line with any normal seasonal trends. We can only conclude that producers, unimpressed with recent downward pricing trends are sitting out of the market. This isn’t sustainable in the long term though.

The EYCI is benefiting substantially from the constricted supply environment, and jumped 44¢(5%) to close the week at 962¢/kg cwt. Dalby averaged 966¢/k cwt, Roma 956¢/kg and Dubo 949¢/kg cwt. Wagga prices stood out at an average of 1012¢/kg, with vealer steers trading there at 1059¢/kg.

In the west, there was no joy, with a 58% increase in yardings week on week to 302 head doing the index no favours, pushing the WYCI down 50(5%), to close at 871¢/kg cwt; with the normally premium vealer specification visibly struggling. Vealer heifer prices, at 821¢/kg clocked in 21¢ below the yearling heifer price. Market activity was equally shared between feedlots and restockers.

The national cattle indicators were all lit up in green this week, with the price for best weekly performer going to heavy steers, which gained 15%, to close at 459¢/kg lwt (albeit on a volume of 104 head) followed by restocker steers, which pushed up 8% to finish up at 594¢/kg lwt. The wooden spoon went to processor steers and vealers, which only managed a 1% increment from the week prior.

The US frozen cow 90CL price slipped back 3¢(<1%), closing the week at 820¢/kg swt, as a result of both exchange rate appreciation and a drop in the price in US dollar terms. Steiner reports that the US imported beef market continues to take a softer note, with a seasonal increase in domestic lean beef supplies to blame. US buyers have been watching the decline in the Aussie cattle market closely, and are holding back on bidding on the expectation that more well priced opportunities will become available in the next few months.

The week ahead….

The pickup in cattle markets over the last couple weeks feels like a bit of a “dead cat bounce”, driven by unsustainably low supply, and possibly a few bargain hunters jumping in. While it may be pessimistic, until we see prices hold up under more normal sale volumes, we can’t even begin to call this the start of a genuine turnaround in the market.

Those who held their nerve and have sold recently have been rewarded, but it seems that buyers in this environment are shouldering substantially more risk. Volume will need to return to the saleyards eventually, as the cattle are out there, it’s just a question of when they flow.

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Data sources: MLA, steiner, Mecardo

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