Herd rebuild kicks into top gear

Herd rebuild kicks into top gear

Beef
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Slaughter reviewed down as rain sees producers hold stock: MLA November cattle projections

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AGENTS are predicting very little of the typical saleyard throughput rise leading into Christmas this year, an indication the strength in young cattle prices will hold up.

The widespread rain just received and the positive three-month outlook will likely see pasture and grain availability at a level that allows producers to hang onto stock.

The intention to rebuild is intensifying, analysts and agents say, as the length of time the cattle market has lingered in record territory makes selling ahead of time less enticing.

The last cattle projections for 2021 released by Meat & Livestock Australia say given the young cattle market has been primarily fueled by restocker activity all year, prices are indeed likely to follow the availability of feed moving into summer.

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MLA's market information manager Stephen Bignell said the rebuild was expected to continue into 2022, as the Bureau of Meteorology prediction of a La Nina would ensure ground water supplies were available.

"The favourable harvest conditions of 2020 and 2021 have also allowed Australia a feed grain buffer should the 2022 season deteriorate," he said.

Southern Queensland agent Maugan Benn, GNF Warwick, said most people were now opting to hold onto cattle due to feed sitting in paddocks and the fact they don't want to be in the restocking market.

"The cattle market may have hit uncharted levels but with the amount of widespread rain we've just seen, and talk of a good summer ahead, there is a chance of the store market getting even better," he said.

"Yardings were well down while the rain was happening and this week will be the same.

"The people selling at the moment are only those who have got cattle to a certain weight range and don't want to miss a specific market. Everyone else is holding their stock."

Already there was inquiry around bringing stock onto weather-damaged crops, particularly in NSW, agents have also reported.

MLA's November projections said the Eastern Young Cattle Indicator had appreciated 33pc in the past 12 months. Over the past three months, restockers paid on average a 113 cents a kilogram carcase weight premium over feedlots for young cattle.

The gross value of heavier cattle in 2021 has also reached its highest level in four years, with the heavy steer indicator rising 18pc.

Exporter headwinds

The good seasonal conditions have resulted in MLA analysts revising down slaughter forecasts to 6 million head for 2021, the lowest level in 36 years.

While carcase weights are expected to reach record levels due to the good conditions, overall production will continue to fall.

The lack of supply is only one of the factors making life harsh for processors and exporters at the moment. Labour shortages, high shipping costs and a surging Australian dollar are creating additional headwinds for exporters to make a return, MLA's November cattle projections said.

The Australian dollar is currently sitting at 75.1US cents, appreciating 4.5pc in one month.

"Australia's inflation could exceed the Reserve Bank of Australia's target of between 2 and 3pc, leading to an interest rate rise. This will not only increase the price of food within the domestic economy, but will also put pressure on the competitiveness of all Australian exports, including beef. Furthermore, the exchange rates of some major competitors have fallen, such as the Argentine and Brazilian currencies," the MLA projections said.

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