Restockers to set pace after Autumn break

Cattle,Herd,Australia,,Hereford,Cattle,In,Lush,Grass,In,Nsw.

Most recent industry outlooks point to a steady-as-she-goes cattle market for the medium term, with strong ongoing export demand and high slaughter levels counteracting the larger herd numbers. With some rain having fallen, restocking action in the market is now expected to kick back in, but to what extent will continue to be dictated by the weather.

It’s official – we are no longer in an El Nino according to the Australian Bureau of Meteorology. Many parts of the country are still looking for a decent autumn break of course but given the very prediction of that El Nino was one of the catalysts for the extent of the cattle market decline last year, it will be interesting to see how producers react to the weather outlook. Which apart from being the end of El Nino, has given most of the country an equal chance of getting either higher than or lower than median rainfall.

Giving us some insight into how active a role restockers could play is the new Beef Producer Intentions Survey, put together by Meat and Livestock Australia for the first time in February, with data collected in November last year. They found that 47% of producers nationally expected to have fewer beef cattle in their operation this year, compared to 38% expecting to increase their herd (with the remainder expecting to remain at current levels). Of those looking to increase, 84% of this would come from retention of stock, not purchasing. Of those expecting to decrease, the top two reasons for doing so were dry seasons and the volatility in the cattle market.

Those expecting to decrease numbers would predominantly do so through the culling of older cows. Despite strong export prices, the national processor cow price has been tracking well below the five-year average, with last week’s substantial dip even below the 10-year price. Using the weekly average price for 2024 so far of 432¢/kg, which is close to where it was before last week (which had a public holiday), a 650kg live weight cow would return about $1684.

If we look at buying back in, AuctionsPlus action has been fairly underwhelming for most categories of breeding stock in recent weeks, but PTIC cows have been the category with the highest numbers offered and some of the highest clearances, especially given the higher numbers available than most other sectors. Last week, 1100 were offered with a 42% clearance and an average price of $1580. 

What does it mean?

If you have feed available, or the rain has already started to fall where you are, it could be an opportune time to trade into younger females. While there is little indication of any significant upside in the market, if the weather cooperates then restocker sentiment could be bolstered and push those sectors of the market up.

In terms of the trade-in, while export demand especially for cull cows headed to the US is expected to continue, the equally strong supply will likely put the brakes on any significant price rise for that product.

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Key Points

  • Prices are expected to be steady for the medium term as strong export and slaughter counter higher herd numbers.
  • Cattle market to start looking to restockers for direction, but a recent survey indicates their intentions for buying are limited.
  • Trading into younger breeding stock is currently a viable option – if you can find the right product.

Click on figure to expand

Click on figure to expand

Data sources: Meat and Livestock Australia; AuctionsPlus, Mecardo

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