THE cattle market has started the year at a blistering pace, with sensational weaner prices in the south pushing the broad indicator to a new peak.
The Eastern Young Cattle Indicator hit 830.75 cents a kilogram carcase weight this morning, surpassing the previous record set in November of 829c.
La Nina flexed in Queensland and prices took off in Victoria.
The story, for the next month at least, is more and more grass combined with less and less numbers, which agents say can only sustain the strength in the store market.
The likelihood the EYCI will go much higher, however, is limited by the Australian dollar gaining ground which puts pressure on export prices and the slim margins now on offer for turning over weaners, analysts say.
Most seem to believe the peak has been reached but it will hold.
ALSO IN BEEF:
- Looking to expand? Here's the lowdown on leasing versus buying
- Blurred lines between animal welfare and animal ethics
- Here's what beef producers should be telling people
The scramble for smaller cattle, which present the opportunity for larger profit margins, saw 300 kilogram and under cattle at the Victorian sales make in excess of 540c liveweight - some went as high as 600c. Most stayed in the south, where there is plenty of feed to take them to feeders or finish them in good time.
Mecardo analyst Angus Brown said Victorian light steer prices were 80 per cent above 2019 levels.
He said 300kg steers sold at prices that represented a 22pc premium over the December EYCI.
Last year, those same weaners were just 14pc above the EYCI.
Speaking on the Commodities Conversations podcast, Mr Brown said it was unlikely weaner prices could go higher from here. Whether they come off depends on the season.
"A good autumn and they might tick along around these levels for some time," he said.
Meat & Livestock Australia market information analyst Stuart Bull said while the bulk of calves stayed in Victoria, there was an increased percentage, on previous years, going into NSW.
"That's indicative of the continuing restocking sentiment and speaks to the fact there is plenty of empty paddock space in NSW," he said.
Mixed farmers in areas like the Central West, Riverina and even the New England have capacity, along with money in their pockets courtesy of good harvests - and that is fuelling big hopes for upcoming weaner sales in northern NSW and the Queensland store market in general.
Northern Rivers agent Darren Perkins, George and Fuhrmann at Casino, agreed the peak of weaner prices had probably been reached but said the results in Victoria set solid foundations for weaner suppliers further north.
"We produce a lot more crossbred cattle here, and not many crossbreds go into southern areas, but the seasonal outlook in southern Queensland, where a lot of our buyers come from, is far more positive than it has been the last few years," he said.
Early action from those looking to acquire weaners was expected, he said, and many smaller producers would likely take the money earlier.
"Weaner prices can only get to a certain level before people fall back into cows and calves and we are already starting to see that," Mr Perkins said.
"But overall, the outlook for store cattle is a big green and bright light."
Mr Bull said as Queensland sales came back online, a clearer picture of where the EYCI was headed would emerge, but the expectation was it would hold at a strong level for the short term at least.
"We've already seen the demand is still there and supply is expected to be tight for most of this year," he said.
"Rainfall through a lot of Queensland over the past couple of weeks should help to reinvigorate confidence even more."
Indeed, some beef consultants believe there is now a feeling that those drought-affected cattle operations that have not yet scratched the surface of buying back in have been left behind.
The prices paid for light weaners in Victoria may have been whopping but those buyers will have cattle to sell later this year, one farm advisor said.
Dalby agent Jason Fitzgerald said the dry patches in Queensland were starting to fill in and numbers on offer were fast dwindling.
"Queensland's paddocks are not understocked to the extent of NSW's but there is already capacity evident and that will only increase with more rain," he said.
"Scarcity will really kick in from here," he said.
There was also a smaller offering on AuctionsPlus' first week of cattle sales for 2021, with summer storms playing a role, Holly Baker reported.
Cows with calves at foot ranged from $1620 to $3510 a head and pregnancy-tested-in-calf heifers averaged $2392 a head.