YOUNG cattle prices have now plummeted to a level not seen in close to four years and far deeper than what was expected, with agents and analysts struggling to put their finger on exactly what is driving the ferocity of the plunge.
Agents say the lift in supply has been far greater than predicted, with most people not realising just how big the increase in weaners was coming through the system in the south on the back of the rebuild.
They also believe restockers are now very hesitant, with the dryer forecast and uncertainty about economic conditions weighing heavily on minds.
Analysts back that, saying it's possibly the only explanation given there is now a disconnect with offshore beef pricing which has held up, particularly in the United States.
"We are already at levels where we should be seeing support come into the market so we can only conclude that both the young cattle and heavy steer market is now undervalued," Episode3's Matt Dalgleish said.
"All signs point to the downward momentum easing, with a slight upward bias - but we note that should have already occurred."
The Eastern Young Cattle Indicator lost another 34 cents a kilogram carcase weight in the past week to sit this morning at 582.46c/kg, which means it is now back 90c over four weeks and a whopping 528c below the year-ago value.
It's still not back to where it was before the 'great turn' of February 2020, when it went from 477c to 750c within two months.
Mr Dalgleish said May was often a month where the highest level of turn-off between the northern and southern systems occurred, before the south effectively 'switched off' for winter.
However, the number being presented for sale at the moment was still above what was typical for this time of year, Wodonga agent Kevin Corcoran, Corcoran Parker, said.
"There has been an enormous supply of small weaners - we don't really know where they're coming from but we know now we underestimated what was there," he said.
"A lot of producers now have 10 to 20 per cent more breeders more than they've ever had, and conception rates have been exceptionally good - 97pc was common, so that explains some of it.
"On top of the supply pressure, there are not many paddocks with space in them anymore and people are taking a lot less money for kill bullocks and yearlings than they got last year, so that's put the brakes on demand."
Mr Dalgleish said the female slaughter ratio was still at a level indicating the herd was in rebuild phase.
"There are definitely indications there is a confidence element at play. People are happy to rebuild but not to chase big prices," he said.
"Even though rain has been there in the south, the chances of it extending out are slim. People are now preparing for a dry spell."
ALSO IN BEEF:
All reports are that processor buying is very subdued at the moment and that is also creating some worry in restocker minds.
Meat & Livestock Australia market information analyst Jenny Lim said some processors were now booked out for months.
"Elevated slaughter and filled contracts at the processors are reducing the need to supplement numbers at the saleyards," she said.
Mr Corcoran said Queensland kill cattle were finding their way into Victorian works, taking space that was limited anyway.
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