There are no prizes for guessing that the weather is staying dry. And there are no prizes also for guessing the dry weather is having an adverse impact on livestock markets and prices.
The past three to four weeks, since just prior to the Easter break, markets have felt some extreme pressure. The cattle industry benchmark price indicator for young cattle – EYCI - is down more than 40 points or 10 percent while the sheep industry’s heavy lamb indicator is down a little more than seven percent for the same period.
As of Tuesday the EYCI closed trading at 498.75/kg cwt – down 25.5¢ on two weeks ago, slightly up on its close of last Tuesday but 162.75¢ down on where it was last year.
The story of EYCI has been an interesting one over the past three years. After breaking through the 500c/kg threshold in June 2015, it rose into the 600s and then 700c/kg, topping 725c/kg in mid-August of 2016. However from there it has been all downhill, and after spending almost 13 months trading above 600 cents it has broken down and looking for support at a 500c/kg trading level.
So what does all this mean for the future of cattle prices? Well little if it doesn’t rain and doesn’t rain soon especially in the areas where pasture growth is required before the chills of winter set in and particularly where the benefits the grazing of fodder crops is not readily available.
Looking at turn-off and it has been of interesting to note that while supplies to cattle markets have been increased since just prior Easter, the turn-off of lambs and sheep have decreased.
Of particular note is the number of cattle sold via the saleyards system has escalated in the order of around 30 percent at the major reported yards, while the number of cattle slaughtered has remained relatively steady. However the mix of the kill has changed with a sharp ramp up in the number of cows being processed.
This can be observed in Queensland and New South Wales where the portion of female versus male cattle processed are identified on a weekly basis. The increase there in the female kill has jumped about 5 to 8 percent in the four weeks since prior Easter compared to the 4-6 weeks before that.
Alternatively the saleyard lamb supply, which as mentioned has dropped since prices began to ease, has not seen the same decrease in slaughter in fact that has increased and this past week averaged around 10pc above the first quarter 2018 weekly average.
The irony in these lamb slaughter figures is that lamb slaughter for the 2017-18 processing year still remains six percent up on the levels of 12 months ago but remains on par to the two years previous at date while the supply offered via the saleyards is also four percent higher.
Industry sources suggest that since the recent drawback in saleyard prices, from market averages above 600c/kg back into the range of 560-570c/kg that more lambs, heavy weights in particular, are being offered direct to works which in turn is adding to the reduced demand in markets.
If this is the case and the fact it is difficult now to obtain a kill space timeslot before late May, and in some case early June at the major processing plants, then forward offer prices of 620 to 660c/kg do look attractive for producers willing and able to finish lambs into winter months.