Strong supply, restocker caution adds up to plummeting cattle market

Agents say far more caution is now evident in restocker sentiment as well, on the back of traders trying to break even on hefty price tags paid last year for weaners and the view that the market still has further to fall.

The Eastern Young Cattle Indicator has dropped another 50 cents a kilogram carcase weight in the past four weeks to sit today at 669c, which is a substantial 441c below it's year-ago value.

Mecardo analyst Adrian Ladaniwskyj said prices for young cattle have not been this low in nominal terms for more than three years.

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All cattle indicators are on a downward run now, with the heavy steer coming back 9c in the past week.

Meat & Livestock Australia analysts said 'price fatigue' had set in.

"Some feeder buyers who bought cattle at much higher prices are having to sell those for less than expected," they said.

"Processors, who can get stock cheaper while being presented with more choice, can be more selective in their buying."

Victorian agent Anthony Mahony, Brian O'Halloran and Co at Warrnambool, agreed.

"People who paid big prices last year are now in a situation where they'll be lucky to break even," he said.

"A lot of cattle are not even making it to the saleyard, but rather are being sold over-the-hooks which is what tends to happen when the market is dropping," he said.

"People opt for the guaranteed price."

He said many restockers did still have room in paddocks but had become fairly cautious and much of that was driven by the market being somewhat in unusual territory where it was difficult at the moment to guage.

"If you asked 10 different industry people what the market is going to do from here, you'd get 10 different answers," he said.

"The issue with processors not being able to operate at capacity due to a lack of workers is also worrying people.

"It seems there is no problem selling the end product but actually processing it is the issue and that's something we haven't really seen to this extent before."

Elders livestock sales manager for southern Queensland Ashley Loveday, Dalby, said numbers could be affected going forward by producers planting oats and wanting to hold what cattle they had.

"There is no big incentive to sell right now. We'd have to see a significant turnaround in the feeder and slaughter market before store markets start to pick up and there's no sign of that at the moment," he said.

"Bigger supply will come forward again once western Queensland starts to move into May."

National Australia Bank analysts said the dry outlook for 2023 was presenting an additional challenge, although grass levels were likely to be excellent across much of Queensland following big rains.

On balance, NAB's analysts see further downside in coming months.