Early signs of a slowdown in the November supply ramp up are starting to emerge, with the acceleration in yardings clearly coming off last week. Slaughter numbers also took the first stumble in some weeks. Higher prices for finished cattle suggest that demand is still there for animals destined for processors, however, some softness in the restocker market is beginning to show, particularly in the north.

Slaughter numbers slipped back for the first time in the last month, retreating 4% week on week to 96,716 head. Almost all of the reduction came from QLD, with the other states only posting minimal changes.

East coast yardings rose 13% last week, to reach 54,113 head, which was in the general direction we expected. The continuing increase in supply last week emanated from the north, with QLD booking the majority of the increase. The early indicator of the EYCI yardings posting a fall this week suggests that this week’s yardings data will display a more subdued tone when the numbers are released.

The Eastern states Young Cattle Indicator (EYCI) slipped back 5¢(<1%) from last weeks close to 1,068¢/kg cwt. Eligible young cattle yardings dropped 18% to 13,787 head. A reduction like this usually indicates that cattle supply of all specifications in the greater market may have fallen, however, 14k is still a relatively high absolute number, so it is more likely to be a signal of flat to reduced growth in supply attributed to this week.

Key EYCI contributor markets were another mixed bag this week, with Roma Store prices down 2% to 1,070¢/kg cwt despite 16% lower yardings, and Wagga Wagga followed suit, down 2% to 1,080¢/kg cwt, also posting 14% lower yardings.

However, Dalby prices lifted 3% to 1,060¢/kg cwt, buoyed by a 47% fall in offerings, and Dubbo prices lifted 3%, to 1,080¢/kg in line with a 12% reduction in yardings.

The national indicators all posted gains, with the exception of Restocker steers, which backtracked 1%. In contrast, Processor and Heavy Steer prices both lifted 4%. Looking deeper into prices at a state level, there is a bit of a tale of two cities going on. Restocker prices fell marginally in QLD, yet rocketed up 96¢(16%) in VIC to reach 596¢/kg cwt, with medium steers and processor steer also booking gains of 5% week on week. On the slaughter ready cattle side, VIC medium cow prices also fell almost 7% and heavy steers slipped 2%. Meanwhile in QLD, all finished cattle specifications made moderate gains. These contrasting price movements suggest that interest for Restocker animals in the south may be relatively stronger than in the north at present.

90CL frozen cow prices tracked up 1¢(<1%) last week to close at 815¢/kg swt, with the appreciation in the AUD dampening the impact of a lift in the price in US dollar terms of 3¢ to 278¢/lb. Steiner reports that the market for lean beef has ticked up in response to concerns in the trade about expected availability and pricing levels in the front end of next year. These are mostly centred around the expectation of lower domestic US supply in the short to medium term.

The Aussie dollar fell 1.6% from its recent high perch to 0.740US. Reports of a worsening COVID-19 outbreak in China, and economic concerns weighed on the market.

The week ahead….

 The steep uplift in both supply and demand that we have seen over the past month seems to be showing signs of easing. This is in line with historical patterns of supply and slaughter over the past 5 years. Prices appear well supported in the short term, particularly for finished cattle, however the contrast between the trend in pricing outcomes for Restocker cattle in the north compared to the south is something worth closely monitoring.

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Data sources: MLA, Mecardo, BOM

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