Cattle price plunge deepens, EYCI now at 918c

Largely, it is concern about lack of profitability in the feedlot and processing sectors that is holding restockers back, because paddock feed remains plentiful and there is enough confidence in the season.

Whether it's high beef retail prices taking a toll on retailer demand, processors lacking the labour to convert cattle to beef or feedlots running into even tougher trading conditions, the challenges the rest of the supply chain is facing seems to have rattled restockers.

The benchmark Eastern Young Cattle Indicator has taken another weekly nose dive to sit today at 918 cents a kilogram carcase weight, which is a 110c drop in four weeks and 181c below the year-ago level.

Feeder steers have also dropped more than 50c/kg live weight over the past four weeks and processor steer prices continue to plunge.

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Victorian agents reported prices for the better end of young cattle were back by as much as $300 a head this week.

"We are hearing a lot about meat sitting in fridges and processors not getting the orders they had been," Wonthaggi agent Alan Bolding, Alex Scott and Staff, said.

"That drop in demand, and prices, for finished cattle had to start flowing back through.

"The demand simply has to be there at the other end."

Numbers of head on cattle dropped back a significant 11.16 per cent nationally in the last quarter and most agents and analysts feel that trend will continue, taking with it the feeder steer price.

High grain prices, years of high cattle prices and low availability, export market volatility, transport and logistics woes and persistent wet weather events hampering cattle performance have knocked the feedlot sector around, analysts said.

The proportion of cattle being turned off as grainfed was at record levels at the start of this year, higher than grassfed, analyst Matt Dalgleish, episode3, said.

But the last two quarters have seen the grainfed proportion of turnoff dip back under 50pc.

Mr Bolding, and agents across NSW and Queensland, said the red hot competition between restockers and lot feeders for cattle had underpinned much of the lofty heights in the cattle market but that element had dropped away significantly now.

Meat & Livestock Australia data shows yardings ramped up fairly solidly in Queensland and NSW last week but fell in Victoria and South Australia.

Mr Bolding said numbers in the south declined with the price drop, and given the feed about would possibly stay that way.

"It's possibly been the wettest I've ever seen it," he said.

"We will have trouble with hay and silage this year but it's not the season affecting buyer sentiment right now, it's the end price and demand."

The decline in the cattle market may at least help the herd rebuild along now.

While slaughter and production has lifted, as shown in the September quarter data just released from the Australian Bureau of Statistics, the rebuild is considered to have come at a much slower pace than would be typical.

MLA maket information analyst Jenny Lim said national male carcase weights remained firm quarter-on-quarter at 348kg but production increased.

Male cattle slaughter increased 6pc.

"Favourable seasonal conditions around much of Australia has seen many of these cattle come to weight with new season stock maturing and hitting the market," Ms Lim said.

The carcase weights coming out of Victoria have seen a 3pc increase. With slaughter in the state also increasing, production was able to lift 7pc quarter-on-quarter.

Queensland weights remained firm as the third highest on record while NSW softened.