CONVENTIONAL wisdom tells us that weather drives the cattle cycle.
Periods of elevated rainfall and subsequent pasture response usually lead to growth in herd numbers while lack of rain and depleted pastures usually mean higher than normal turnoff and consequential herd reduction.
But this year as we wait to see what will replace the La Nina pattern that has been so beneficial over the past three years, there has been an unusually severe market correction which has everyone guessing as to why it has plummeted to the depths that it has.
At the Stanthorpe May weaner sale last year, the usual mix of steers and heifers averaged 701.7c/kg for $1736 per head.
This year same sale and same average weight saw prices fall to an average of 353.8c/kg or $872/head. Since then prices have fallen even further.
At the same time input prices for just about everything, including interest, have risen.
The problem this creates is how to balance out the cash flow.
For some that might be achieved by drawing on Farm Management Deposits boosted by the years of exceptional returns.
Others, however, who might have been inclined to pour money into infrastructure, machinery and vehicles might have no such cash reserves to draw on.
For this group, one solution might be to go to the bank manager to negotiate an increase in the working account limit.
Alternatively, it could mean selling more cattle than planned.
This means that the heifers that may have been earmarked for retention to build herd numbers might now be reassigned in the cash flow as either feeders or fats for slaughter.
That in turn could see an end or at least an interruption to the herd rebuild phase well before weather plays any part.
In fact, slaughter figures suggest we might already be at that stage.
2019 ABS figures confirmed herd liquidation at its peak with female proportion of the kill at a very high 56 per cent. Despite good rain in 2020, liquidation continued with females at 52.5pc for the year before rebuild got under way in 2021 with females falling to 42.9pc in the final quarter.
The rebuild continued in 2022 with females averaging 42.8pc for the year and carried into first quarter 2023 at 42.4pc.
But May and June this year, according to MLA, have seen a spike in females killed with figures for individual weeks rising to 45-46pc.
This typically signifies neutral territory somewhere in between the more amplified rebuild and liquidation phases.
Some of this spike in the female kill may be due to natural flow of empties from first round musters but there is also the likelihood of increased numbers of heifers coming through.
Winton agent Tom Brodie said a lot of lighter weight cattle were brought up into that region from southern Queensland last year and again this year in response to the abundant feed.
But these were bought for turnover and only a small number of the better quality types among the heifer component were kept, leaving most to go on to feedlots.
As the year spins out this should mean numbers continuing to come through later on as the tendency, particularly with the dearer cattle, will be to hold them to heavy feeder or slaughter weight to maximise return while ever the feed holds out.
On that score the latest rainfall in the district is very encouraging.
On Monday Tom reported 70mm around Winton, 60 at McKinlay but lesser registrations at Boulia and Hughenden, although it was still raining at the latter.
With virtually nothing in April, May and June, some of the bulkier stands of Mitchell in the district were starting to get brittle and inclined to crack and break up under the wheels of the vehicle but with the benefit of some warm days once it clears, this amount of rain should bring some green back into the Mitchell and start a bit of herbage.
In contrast if there had been only 30mm, Tom said everyone would probably have started ringing up to order lick.
Fortunately, too, the wind has been very light and with the low temperatures this will be a saving grace with the amount of shearing and lamb marking going on at the moment.
Weekly kill peaks in June
LOOKING at MLA's weekly slaughter figures one might conclude that the processing sector has somehow grown an extra leg to be able to jump from 119,000 head per week in May to 124,000 head in June and thus create an expectation that some further improvement in slaughter capacity is possible.
However one major multi-site processor downplayed any further incremental gain in throughput as unlikely for the remainder of this year.
Where Saturday shifts have occurred, these have been ad hoc for the purpose of unclogging the supply pipeline in regions such as central Qld where demand for kill space has been heavy. There was no expectation in the present labour environment that these would become a regular weekly occurrence.
But in other instances with smaller individual works there does appear to have been some success in achieving company growth objectives with one south-east plant now incorporating a night shift as a regular part of its production regime.
On the trading front, pricing is taking second place behind the shuffling of cattle brought on by the recent rain. Once things settle, grid rates will be reviewed.
In the meantime central Qld plants appear to be well covered to the end of the month and surprisingly for this time of year plants in southern Australia are also full for July.
Overseas and domestically the prospect of higher interest rates and a weakening global economy are having a direct effect on consumer meat purchase decisions.
Steiner last week noted that retail demand in the US (as opposed to foodservice) was keeping domestic fresh lean beef prices moving forward but this was not helping the imported frozen product which is trading as much as a US50c/lb discount to domestic fresh.
