Cattle price decline kicks off in earnest, EYCI dives 39c

The benchmark Eastern Young Cattle Indicator has dipped to its lowest point in three months, sitting today at 977 cents a kilogram carcase weight, which is a 39c drop in one week and 128c below the year-ago level.

While restocker interest has no doubt taken a hit from wet weather affecting both cattle performance and the sheer ability to get stock onto ground, most agents seem to think the declining market is a reflection of a more widespread cautiousness.

Rising input costs, the pressure on consumers paying record retail prices for beef and volatility in global markets had to come back to the saleyard at some point, Elders national livestock manager Peter Homann said.

"We all thought the beef job would have taken a step backwards by now but it's definitely starting now," he said.

"The rising costs along the supply chain have to take a toll. There are also big concerns about the cattle job running into a lack of capacity to kill, and the effect that will have on prices, which has happened in sheep.

"Long term, sentiment is still good and there is optimism about beef and agriculture in general but there has been a feeling the cattle job does need to come back and that is what is happening now."

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In the south, the low volumes on offer is about to turn with weaners coming onto the market but in the north, most agents felt there would be no great lift in supply before Christmas.

Many processors have already booked in the cattle that will take them through the Christmas closures, so the expectation is processing competition in the marketplace will ease significantly from here.

The National Feeder Steer price has also softened significantly. It finished last week at 479c/kg live weight, a decline of 38c/kg over four weeks.

Meat & Livestock Australia senior market information analyst Ripley Atkinson said challenging operating conditions relating to input prices and wet weather impacting cattle performance in the feedlot had clearly impacted feedlot buyer demand.

Analysts are not keen to put any predictions on how far the market is likely to fall between now and Christmas but a decline in the new year has long been forecast, as cattle volumes increase and summer pasture growth starts to dry off.

Rabobank analysts believe while the Australian cattle herd was growing, "it is possibly not doing so at the rates we have seen in the past".

But cattle supply will definitely increase next year.

"Everyone is now looking to 2023 - the question is how quickly will things change," Rabobank's international animal protein strategist Justin Sherrard said.

"We did expect beef production to come up this year but such have been the constraints in the processing sector, largely labour related, that we will actually likely end this year down on production and export numbers.

"This had not been the year we thought it was going to be and as such, cattle prices have remained high - but at what point do you start to really feel consumer resistance to retail beef prices?

"Australia exports most of its beef, so we are also in the position of wondering what is happening to consumers in destination markets."