Cattle herd drover

Rainclouds gather on the horizon, and the cattle market is mustering some hope for a shift in fortunes. Supply numbers ebb, slaughter rates rise, and the Eastern Young Cattle Indicator paints a tale of restocker activity improving.

Many of the key saleyards noted a slight pullback in cattle supply this week. Preliminary reports indicate that 34,483 cattle were yarded, representing a 21% decrease compared to the previous week. It is also significantly lower than the same week last year when 42,040 head were yarded nationally.

Cattle slaughter rates remain elevated. For the week ending the 3rd of November, the national slaughter of 131,488 head was 38% above the same time last year. Cattle slaughter rates have been tracking along at levels that are most closely aligned to 2017 in recent weeks, remaining below 2018 & 2019.

The Eastern Young Cattle Indicator gained 33¢ over the week in what is the most significant bump in price we’ve seen for months. The EYCI is currently sitting at 399¢/kg cwt and it’s all thanks to restockers. As we mentioned last week, restockers have been paying a premium to processors and lotfeeders for young cattle. This week they were paying almost 50¢ more than the week prior, 30¢ above feeders, and 65¢ more than processors for young cattle. With processors and lotfeeders occupied with existing volumes until the new year, it is understandable that restocker buyers are taking the lead after rain.

In Western Australia, young cattle saw a modest improvement of 5¢/kg cwt compared to the previous week, placing the Western Young Cattle Indicator (WYCI) at an even 399¢ for similar-spec cattle in the east.

Processor cow prices have been consistently improving over the past four weeks, gaining an additional 3¢ to reach 170¢/kg lwt. Conversely, the heavy steer market has struggled to gain significant momentum in recent weeks. The National Heavy Steer Indicator declined by 6¢ this week, reaching 203¢/kg lwt.

Widespread rain in the normal northern feeder cattle supply areas initiated a tightening through some saleyards. This sparked stronger competition for feeder cattle, leading to a price increase. The Argus-reported Northern cattle feeder price rose by 12¢ to 237¢. After a decline since August, this upward trend is generating optimism that we may have reached the bottom. However, more rain will be necessary during summer to solidify pasture conditions and attract restockers back to the market.  

Next week

The Bureau of Meteorology (BOM) has revised its rainfall outlook, predicting decent falls in the coming weeks and months. Not only is more rainfall forecasted for the east in the upcoming week, but the December and January outlooks are now more favorable. Most regions across the country are expected to have a higher chance of exceeding median rainfall during those months, except for coastal northern Western Australia, coastal Queensland, and FNQ, which still have a relatively low chance.

Improved pastures and a better summer crop outlook will help restore confidence in a market that has been lacking, but it will require good rains in the right areas. The impact on processor and feeder markets will be gradual until the new year if they expect the supply outlook to thin out.

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Data sources: MLA, Argus, BOM, Mecardo

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