Young cattle prices stabilise & heavies miss out.

Angus cattle

As we settle into the marketing year, young cattle yardings have grown mostly in line with historical patterns, and with it, demand, leading to relative price stability this week, as the Eastern Young Cattle Indicator (EYCI) crept up slightly. However, finished cattle prices fell, indicating that buyers are now adjusting their view based on what appears to be a new normal in the markets- at least for now anyway.

Last week’s slaughter numbers, while still growing 103% week on week to 48,357 head are in fact down 20% from the same time last year, representing a bit of a departure from the largely above-trend numbers we have been seeing in the past couple of months. One week out of synch does not necessarily indicate an ongoing pattern though, and given that finished cattle prices have fallen, it can only be expected that processors will take advantage of the situation and increase production if they can.

Preliminary east coast yardings this week grew by 42% week on week to 33,023 head (figure 1) with contributions to the EYCI and feeder steer indexes growing 44% to 11,310 head, and 38% to 4397 head respectively. Restocker activity almost doubled, up 89% week on week to 715 head, and cow offerings ramped up 193% to 534 head. More broadly, selling activity in QLD remains well under 2022 levels and the five-year average, however, VIC and NSW marketing activity appears more enthusiastic than in 2021, and are operating closer to five-year average levels (figures 2 & 3).

Despite the downward price pressure from additional supply on offer this week, the EYCI managed to advance 8¢(1%) to finish the week at 784¢/kg cwt. Dalby, Roma store, Wagga, and Dubbo collectively represented 53% of the index this week, with Roma Store steers trading at 918¢/kg, Dalby at 780¢/kg Wagga at 790¢/kg and Dubbo at 728¢/kg.

The NLRS report at Roma indicated that the premium average prices achieved for steers were strongly correlated to the quality offering, but stronger competition was also observed for lighter steers and heifers by restockers. There was evidence of renewed interest from restockers in Dalby also. Comparatively softer pricing in Wagga was influenced by a doubling of yardings from the prior week, while feeder buying activity was seen to be conservatively constrained, and demand for heavier well-bred lines was limited.

The Western Young Cattle Indicator (WYCI) fell by 45¢(6%) to close the week at 846¢/kg cwt. The index remained 90% dominated by the vealer category, but steer pricing advanced by 70¢(10%) for the week to 711¢/kg cwt.

The national indicators showed mostly negative price movements, especially for the heavier categories, with heavy and medium steers clocking in 6-7% declines to close at 355¢/kg lwt and 347¢/kg lwt respectively. On the other end of the scale, restockers recovered 2% to 493¢/kg lwt.

The US frozen cow 90CL price lost another 9¢(1%) last week, closing at 721¢/kg swt, with most of the fall being related to the strengthening Australian dollar.  Steiner reports that US cattle prices are on the upswing. This is despite a quickening slaughter pace in the short term as processors try to catch up after the holiday period slowdown. Since cheaper Brazilian beef is flowing into the US quickly, and consuming the available quota rapidly, it is expected that competition from those imports will drop off by March.

The week ahead….

Reports of renewed restocking interest in young cattle coming out of Roma and Dubbo are encouraging, however, heavier lines, regardless of quality, and finished cattle may have a way to go before they find their new level. Overall, given that supply has ramped up considerably this week, and yet young cattle prices have advanced, there appears to be some pent-up demand. We may see restockers become more active in the weeks to come, and processors are likely to ramp up, providing much-needed support to the heavier end of the market.

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Data sources: MLA, Mecardo, Steiner

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