Resilience for cattle as slaughter ramps up

Cattle in Brazil

The supply narrative has been hammered home this season but the supply chain looked to be riding the wave with more ease this week. Despite large yardings and larger slaughter, the industry continues to adapt to curveballs thrown its way as price indicators this week were relatively stable in the context of this season.

Eastern Young Cattle Indicator (EYCI) this week has declined marginally by 2¢ to finish the week at 556¢/kg/cwt.  It was another resilient week for Young cattle markets when we consider that the number of cattle yarded that fit this specification (29k) was more than double that seen in the same week last year (13k).  Western Young Cattle had a 24¢ drop this week to finish at 522¢/kg/cwt, and supply is unlikely to be the driver as young cattle yardings out west were in line with seasonal expectations.

Heavy Steers nationally were down 5% to 269¢/kg/lwt, largely driven by the supply out of NSW which increased 70% week on week with 1571 head yarded per NLRS. The unseasonal amount of finished cattle in yards resulted in NSW heavy steers finishing at 265¢/kg/lwt (down 14¢).

National Processor cow indicator continued to slip this week to 388¢/kg/cwt, which is 6.1% down week on week and now 31% below the same time last year. In Victoria, the falls were steepest for this market on the back of a 22% increase week on week in processor cows reported at saleyards, resulting in a 25¢ drop to 226¢/kg/lwt.

National feeder steers finished the week 7¢ lower to 314¢/kg/cwt, and throughput to yards is also more than double year on year.  In NSW, feeders fell 11¢ to 315¢/kg/cwt and in Queensland, feeders finished at 316¢/kg/cwt a 2¢ decline.

East Coast yardings are ramping up, with saleyards seeing a 10% week-on-week increase in yardings to sit above the 50K threshold which hasn’t been passed since early May this year.  This was driven by a substantial increase in numbers in NSW, where yardings were up 30% week on week.  In response to the abundance of cattle heading to market, slaughter is also picking up pace. 

Last week East Coast Slaughter jumped 2%, with 120K head processed.  This was a 22% increase year on year and consequently a fraction above the 5-year average of  (119K) for this time of year.  MLA reports that this trend continued through to this week where preliminary data shows slaughter reaching 121K and the highest weekly figure of cattle slaughter seen since August 2019. 

Next week

As we have discussed regularly, exports will be the relief valve when turnoff starts to pick up the pace. Processors look to have changed up a gear and will need to do so as spring approaches.

How export market destinations react to more supply will be essential to the short-term fortunes of the industry.  Lobby group R-CALF USA, (Ranchers Cattlemen Action Legal Fund United Stockgrowers of America) has recently launched petitions for tariffs to be introduced on Australian lamb to the US.  If Aussie beef were to come under similar scrutiny this would cause exporters and processors alike to give pause on their expectations and risk preference moving forward.

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Data sources: MLA, Argus, Steiner, Mecardo

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