Rising slaughter but no joy for price

Angus cattle in green paddock

Earlier this week on Mecardo we were bemoaning processing bottlenecks, and the impact it was having on demand at the livestock level. Things are improving however, with another lift in slaughter post the public holiday of the couple of weeks ago.

After the lows of the public holiday week, cattle slaughter leapt higher last week.  Figure 1 shows east coast cattle slaughter hitting a new three year high of 127,748 head, up 2.4% on the previous annual high, set just a month ago.

Good processing margins will lead to increasing slaughter capacity, but it’s a slow road.  Despite the increase in slaughter, the Eastern Young Cattle Indicator (EYCI) eased this week, heading back toward 349¢/kg cwt. 

The market is again testing the support at 350¢, even though only 9,200 head were included in the indicator this week.  Dalby was the biggest drag on the market, at 344¢ for 24% of the cattle in the indicator.  Just down the road, Roma Store was priced at 380¢ for 31%.  This highlight more the difference in cattle at each centre, with Roma more light store cattle and feeders, and Dalby at the processor end.

Feeders are still the most expensive cattle in the EYCI, at 364¢, compared to 342¢ for restockers and 327¢ for processors.  Feeders are no doubt enjoying the cheaper cattle, although the finished item is also much less valuable.

Next week

With little rain on the forecast, there isn’t much impetus for price improvement to kick off over the coming weeks.  We are currently in a bit of a holding pattern, with significant upside reliant on wet season rains in the north in another 6 weeks or so.

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Click on graph to expand

Data sources: MLA  Mecardo

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