The Eastern Young Cattle Indicator (EYCI) plunged 22¢ (3%) this week, dipping to 700¢/kg cwt at the close.
Overall, supply of young cattle remains strong, at 15K head, while total east coast yarding jumped 23% week on week to 50K head. Yardings continue to track strongly for this time of year, at 5% above 2022 levels. High supply continues to have the impact of putting downward pressure on market prices.
Slaughter jumped by 23% week on week to 110K head; this is 22% above the level seen this time last year, indicating that capacity is continuing to improve, as processors are taking advantage of the lower prices for cattle on offer at present. That said, demand from this channel is not strong enough to hold prices up or encourage restocker demand.
The usual key selling centres of Dalby, Roma store, Dubbo, and Wagga contributed 56% of the index. Dalby steers sold at 742¢/kg cwt, while Dubbo traded lower, at 721¢/kg cwt. Further south, Wagga Wagga steers also moved at an average price of 742¢/kg cwt.
Market reports indicated that some export buyers were absent at Roma. In Dalby, vendors from further afield including far western QLD, SA, and NSW were trying their luck in the marketplace. In Wagga, demand for well-bred quality light steers was reported as weak, and lower quality cattle struggled, resulting in wide price spreads. Competition for heavy steers was solid from processors and lot feeders.
The BOM has predicted potential exposure to a moderate El Niño weather system by July. It must be noted that BOM’s climate models are quite aggressive, and pessimistic compared to other international ENSO forecasts.
There are no new updates regarding the mad cow (BSE) case that was discovered last week in Brazil, with the official Brazilian Ministry of Agriculture and livestock website silent on the matter. The general consensus among trade commentators, including Steiner consulting is that if the case remains confirmed as “atypical” the trade suspension with China will not drag on for three months as it did in 2021, due to the prompt reporting of this case.
Steiner’s analysis is that the impact of a short four-week suspension of beef trade between China and Brazil will be negligible upon global beef markets, as it is assumed import orders post a ban lift would be larger to account for lack of volume in March. Australia and the US may win a few extra beef orders in the coming weeks, but it’s unlikely to add materially to demand unless Chinese consumers become warier of Brazilian products due to food safety concerns.
US frozen cow 90CL prices saw another promising increase last week, gaining US2.5¢c (1%) to close at 238.5¢US/lb, or +15¢/kg (2%) to 766¢/kg in AUD terms. Steiner reports that US cow slaughter continues to fall back, with early February kill rates running at 13% below that seen a year ago in Feb 2022.
In the last month, the US domestic beef benchmark, the “choice cutout” has lifted US20¢ (7%) to 287¢/lb. In contrast, the monthly gain in imported Australian 90CL prices has been just 4%. This suggests that Australian lean beef represents good relative value to US buyers currently, meaning that it has scope for further appreciation going forward.
US outlook improving but El Niño by July?
The Eastern Young Cattle Indicator (EYCI) plunged 22¢ (3%) this week, dipping to 700¢/kg cwt at the close.
Overall, supply of young cattle remains strong, at 15K head, while total east coast yarding jumped 23% week on week to 50K head. Yardings continue to track strongly for this time of year, at 5% above 2022 levels. High supply continues to have the impact of putting downward pressure on market prices.
Slaughter jumped by 23% week on week to 110K head; this is 22% above the level seen this time last year, indicating that capacity is continuing to improve, as processors are taking advantage of the lower prices for cattle on offer at present. That said, demand from this channel is not strong enough to hold prices up or encourage restocker demand.
The usual key selling centres of Dalby, Roma store, Dubbo, and Wagga contributed 56% of the index. Dalby steers sold at 742¢/kg cwt, while Dubbo traded lower, at 721¢/kg cwt. Further south, Wagga Wagga steers also moved at an average price of 742¢/kg cwt.
Market reports indicated that some export buyers were absent at Roma. In Dalby, vendors from further afield including far western QLD, SA, and NSW were trying their luck in the marketplace. In Wagga, demand for well-bred quality light steers was reported as weak, and lower quality cattle struggled, resulting in wide price spreads. Competition for heavy steers was solid from processors and lot feeders.
The BOM has predicted potential exposure to a moderate El Niño weather system by July. It must be noted that BOM’s climate models are quite aggressive, and pessimistic compared to other international ENSO forecasts.
There are no new updates regarding the mad cow (BSE) case that was discovered last week in Brazil, with the official Brazilian Ministry of Agriculture and livestock website silent on the matter. The general consensus among trade commentators, including Steiner consulting is that if the case remains confirmed as “atypical” the trade suspension with China will not drag on for three months as it did in 2021, due to the prompt reporting of this case.
Steiner’s analysis is that the impact of a short four-week suspension of beef trade between China and Brazil will be negligible upon global beef markets, as it is assumed import orders post a ban lift would be larger to account for lack of volume in March. Australia and the US may win a few extra beef orders in the coming weeks, but it’s unlikely to add materially to demand unless Chinese consumers become warier of Brazilian products due to food safety concerns.
US frozen cow 90CL prices saw another promising increase last week, gaining US2.5¢c (1%) to close at 238.5¢US/lb, or +15¢/kg (2%) to 766¢/kg in AUD terms. Steiner reports that US cow slaughter continues to fall back, with early February kill rates running at 13% below that seen a year ago in Feb 2022.
In the last month, the US domestic beef benchmark, the “choice cutout” has lifted US20¢ (7%) to 287¢/lb. In contrast, the monthly gain in imported Australian 90CL prices has been just 4%. This suggests that Australian lean beef represents good relative value to US buyers currently, meaning that it has scope for further appreciation going forward.
The week ahead….
The Brazilian mad cow (BSE) scare is looking less likely to have a major direct impact on our markets, but we shouldn’t take our eye off the situation.
Closer to home, most producers will be more carefully assessing their grass budgets for the coming year and monitoring precipitation given the looming threat of El Niño on the horizon. Keep in mind that an El Niño in Australia may mean a strong rebuild in the US as their conditions improve, which will provide support to prices.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: MLA, Argus, Steiner, BOM, Mecardo
Categories
Have any questions or comments?
Restockers to set pace after Autumn break
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
Export buyers out of office
With the nation stopping yesterday to commemorate ANZAC Day, Thursday livestock sales did not take place. As a result, this week saw a decrease in
Cattle price volatility lower as supply and demand find balance
Cattle market volatility has waned recently. The wild swings of 2023 saw prices move up to 70% across the course of two months. Thus far
Weather whiplash creates erratic cattle market
Roads and paddocks have begun to dry out allowing the backlog of cattle from soaked areas of Queensland and New South Wales to hit the
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.