THE idea the cattle market is ripe for a rally is persisting, based on both the potential for increased global demand for beef and the good moisture in parts of the country that would normally be dry this time of the year.
Restockers, however, have not shown any indicator of coming out of their slumber this week, with the percentage of Eastern Young Cattle Indicator eligible stock they've bought dropping to a mere 34 per cent of the offering. Typically, restockers take at least half but feeder buyers have dominated the past week.
The EYCI has dropped another 34 cents a kilogram carcase weight in the past week to sit today at 719c, a whopping 406c behind where it was this time last year.
Many agents and analysts believe it is undervalued at the moment, with Episode 3's Matt Dalgleish saying Australian cattle values were now back to more traditional spreads with the United States, therefore putting our beef prices in a more competitive framework.
The full effect of the mad cow disease case in Brazil is yet to be known but it may be enough of an impetus to encourage China to consider opening fully to Australian beef again.
"That would arguably bring some support to the market, and combine with rain in parts of Queensland that have been very dry to give some upward support," Mr Dalgleish said.
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Experienced beef industry operator David Crombie, former National Farmers Federation and Meat & Livestock Australia boss and a producer, said there were many elements playing into the cattle market at the moment.
"Will China open more, will the season break entirely across the north, will we have an exotic disease incursion, what exactly are the herd numbers and is it growing or stabilising - there is a lot of debate on that at the moment," he said.
"There are always short-term factors and unintended consequences that can derail things but we need to take a long-term view in this industry.
"Fundamentally, we are good at producing high quality, verifiable, consistent beef and disposable incomes around the world are increasing so demand for our product can only remain strong."
While an upward tick in the next few months might be on the cards, the forecast is for a gradual decline thereafter.
The EYCI's fall so far this year has been deeper than most expected and has now led to suggestions it might be back as low as 640c by the end of the year.
Analysis conducted by Episode 3 shows that the annual gain or loss in the EYCI follows the example set in January three quarters of the time.
While Episode 3 takes pains to point out past performance is no indication of future performance, the fact the EYCI dropped 10pc this January is a bit of an ominous sign.
It would suggest the EYCI would finish 2023 at 640c.
Mr Dalgleish said price pressure into the last two quarters could mean a 640c EYCI by the end of the year was feasible.
It would likely be highly dependent on what the Bureau of Meteorology has to say going forward, he said.
Shan Goodwin
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
