Cattle prices to stay high well into next year

Analysts now believe it won't be until late next year, possibly even into 2024, that any significant easing in the Eastern Young Cattle Indicator eventuates.

While it's unlikely more dramatic hikes and new records will occur, some projections are pointing to the possibility of a marginal increase during November, given the strength of restocker demand on the back of exceptional pasture availability.

The EYCI has recovered much of its drastic winter losses - some of which was attributed to foot and mouth disease anxiety - and is now shuffling sideways.

The lack of supply is starting to bewilder analysts and agents.

Rabobank's October agribusiness outlook asks 'Where are all the cattle?', pointing out saleyard numbers continue to track nine per cent below 2021, which was down 13pc itself.

Given how long the season has been good, numbers should be rising as the herd rebuilds.

Reports have been widespread about producers taking the opportunity to grow out cattle, but Rabobank analyst Angus Gidley-Baird said the supply situation does now raise questions about the speed of the herd recovery.

Despite weaker beef prices, Rabobank expects cattle prices will remain firm.

"There are pressures at the consumer end, so somewhere along the supply chain there will be pain, but there is enough producer confidence to hold, and buy, cattle that the strength in the market will remain," Mr Gidley-Baird said.

Episode 3 analyst Matt Dalgleish said once it was identified a third La Nina was on the way, and people knew there would be plenty of feed for some time, the downturn in cattle prices that had been predicted at the end of this year was scratched.

"We can kick that can further down the road now, with sideways consolidation the most likely scenario for the cattle market for some time," he said.

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Contributing to the restocker demand, Mr Dalgleish said, was relatively good grain prices compared to other countries, which was encouraging numbers through Australian feedlots.

Victorian agents say as soon as it starts to warm up, they are expecting extremely tight supply and very heavy demand as there will be enormous amounts of pasture on hand.

Tim Jude, livestock and commodities broker with StoneX Financial, said young cattle demand was currently outstripping overall market performance, with Queensland buyers indicating distinct restocking interest as spring improves the prospect for grass availability.

Yearling heifer prices in Queensland last week were a massive 58pc up on the five-year average, with restockers forking out an average of $1410 a head, he said.

"The weakening Australian dollar is helping to make beef exports more competitive, but the strong restocker prices are still tracking ahead of where they need to be to maintain profitability, particularly for premium breeds," Mr Jude said.

Rural Bank's October agribusiness update says reduced cattle slaughter - in NSW and Queensland slaughter fell 10 and five per cent respectively during September - will see reduced beef export volumes going forward.

What's available will be met by weakened demand. A key contributor is the impact of China's continued lockdowns and competition from the United States, which has increased in Australia's key export markets, according to Rural Bank.