Fear of missing out keeps restockers buying at record rates

Fear of missing out keeps restockers buying at record rates

Beef
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Cattle market hovers at all-time highs as rebuild kicks in.

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THE strength of the young cattle market continues to hold with breeding intentions flowing through to phenomenal prices for females in the past week.

Analysts and agents say the resilience the market is showing indicates a good deal of producer faith in how long prices are likely to stay high.

The Eastern Young Cattle Indicator finished yesterday at a record 885 cents a kilogram carcase weight, having crept up another 3c in the past week.

It was a week that saw weaner heifers make just a tad under $2000 across southern sales, and cows and calves top at $4400 at Ballarat.

The downside risk at play due to Australian prices being out of step with global fundamentals seems far from the minds of those with feed in their paddocks and confidence in the long-term potential of Australian beef.

Agents say they are now hearing far more concern about missing out on riding the high price wave.

Dale Keatley, Nutrien Livestock Keatley at Mount Gambier, South Australia, said where some might not be willing to take a risk on the red hot prices of light calves, they'll switch to a different trade - pregnancy-tested-in-calf heifers, for example.

"But bullock fatteners selling on good money at $2700 for a beast on the hook are in the swing and going straight back in again at these rates," he said.

"No one knows how much money is in the next round but what they do know is if you've haven't got them in the paddocks, you haven't got any chance of making money."

That sentiment no doubt plays into talk the herd rebuild is now seriously ramping up and Meat & Livestock Australia's latest forecast is that it will reach 25.2 million head this year, a 2pc lift.

The MLA projections, released this week, said the increase in heifers being retained for breeding purposes will cause the female slaughter percentage to drop in the second half of 2021. It is expected to fall below 47pc, signalling a technical rebuild.

MLA analysts believe the herd rebuild will be more gradual than previous ones, owing to a smaller breeding base and one of the worst droughts on record.

National Australia Bank agribusiness economist Phin Ziebell believes it is possible the EYCI will move higher if Queensland rains deliver, but says local prices are now way out of sync with global dynamics, particularly in light of an appreciating Australian dollar.

On balance, NAB expects saleyard prices to fall somewhat in the back half of the year. It's forecast track has the EYCI at 700c in quarter three and 650c in the final part of the year.

Above-average wet season rain so far means an abundance of pasture in the vast majority of cattle-producing regions is now expected for 2021 - parts of WA being the key exception.

And most of those areas are understocked.

South Australia is interesting at the moment, because breeding herds are typically at capacity yet it's market has followed the EYCI upwards.

Will Nolan, Southern Australian Livestock at Naracoorte, said many weaners were offloaded early as producers opted to take the good money.

So far, those producers are waiting, with feed in the paddock, to see if the interstate interest is going to ease.

SA young heifers and steers, mostly Hereford and Angus, have gone all over NSW and into southern Queensland.

Regardless of whether those northern buyers return for more, winter numbers in SA will be lower, keeping upward pressure on prices, Mr Nolan said.

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