DRY conditions are weighing on the cattle market with restockers taking a breather to see how the feed base situation unfolds.
The benchmark Eastern Young Cattle Indicator (EYCI) this week dropped below year-ago levels for the first time this since 2014.
It finished yesterday at 621 cents per kilogram carcase weight, down 38c year-on-year.
Meat and Livestock Australia analysts, however, say that is still an historically high level and the market will continue to be supported by tight supplies.
Bank analysts say the EYCI is actually trading slightly higher than what their June expectations were, based on the key drivers of weather, the United States import price and slaughter rates.
Clearly, producer/restocker demand was playing a prominent role and was proving enough to keep prices slightly inflated, they said.
Northern NSW livestock agent Ben Hiscox, Bob Jamieson Agencies at Inverell, said the supply-on-par-with-demand situation that was currently fueling a drop in the market was likely to be short-lived.
What younger cattle were available had been consumed and were now on oats country, he said.
“Come the end of July and August, those cattle will still be performing for producers on oats and supply will fall behind demand again,” he said.
“At the moment, late weaners and more store type cattle are generally finding it hard going because there isn’t a surplus of grass.”
The Bureau of Meteorology’s rainfall outlook for the remainder of winter does not offer much reprieve for southern parts.
Rabobank analyst Angus Gidley-Baird said a tough winter in the south would mean producers heading into summer without typical spring feed supplies, leading to an easing in restocker demand.
That could be offset if a wet season eventuates in north and central Queensland, kicking off buying activity towards the end of the year.
“It would be the first decent rain in four years for those regions - you’d expect if they get grass on the ground they will take the opportunity to start getting back into things,” he said.
“Overall, there still isn’t the supply of cattle to see a crash but prices will come back when producer demand eases off.”
Shan Goodwin
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
