QLD weather causes a kink in the chain

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Buyers and sellers continue to lean into a rising market as the supply outlook is re-assessed. Cattle prices rose across the board this week, with the market edging closer to year-ago levels for some categories.

The Eastern Young Cattle Indicator (EYCI) picked up an additional 23¢/kg cwt this week to settle at 667¢/kg cwt. The biggest numbers came out of Wagga this week, but it was the Roma Store sale that turned the best results with EYCI eligible cattle averaging 737¢/kg cwt on account of reduced numbers due to inclement weather.

The northern feeder market has been impacted by widespread rain and flooding in large parts of Queensland. Saleyard throughput in Queensland almost halved this week compared to last. According to Argus, “most feedlots are behind on purchases and are continuing to see yard volumes decrease as they struggle to match weekly arrivals with exits”. The backlog along the chain is also driving processors back into the market to secure numbers for the month.

A well-supported grinding beef market is flowing through to processor cow demand. The National Processor Cow Indicator has risen 90% since the October lows and is currently sitting at 489¢/kg cwt which is just 20¢ shy of year-ago levels. With the rate the US is buying up Australian grinding beef after holidays and winter storms created a shortfall, this is no surprise. However, reports from Steiner suggest that US feedlot supplies are higher than a year ago so the pressure may come off in 3-4 months.

Slaughter remains elevated compared to last year but is tracking shy of five-year average levels. With the short week for the public holiday, eastern state slaughter declined 18% last week compared to the week prior.

Next week

There are signs that a local supply squeeze may be coming later in Autumn, especially if the season proves kind. In the near term once supply starts to move again from the north the extra volumes may ease pressure on the market, however, we expect demand to remain supportive.

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Data sources: MLA, Mecardo

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