The effect an El Nino forecast had on producer sentiment has been widely blamed for the depth and speed of the cattle market fall of 2023.
Hindsight is a wonderful thing but prominent analyst Simon Quilty, Global Agritrends, says there was always a lot more at play.
He makes the point that farmers bringing forward their decision to destock actually also occurred in the previous two cattle cycle downturns.
The reasons for this early destocking were many, Mr Quilty said, but high feed prices were the single biggest influencer.
Paying large amounts of money to keep animals alive was a powerful deterrent, he said.
"The memories of the 2018/19 drought still loom in people's minds and the importance of gaining kill space or room at a feedlot cannot be underestimated," he said.
"Lack of room in the past at feedlots for drought mitigation has been an issue as long-term feed programs like Wagyu have taken priority.
"This was particularly the case in the 2018-19 drought. Light heifers, traditionally poor feedlot converters, were the ones to suffer the most, and many farmers wanted to avoid being left in the same situation again with this coming expected drought."
Extremely high daytime temperatures were another key driver of market psychology, as these lead to pastures drying out and growing seasons being cut short.
In recent years, these daily temperature highs have become more consistent, Mr Quilty points out.
"With climate change media coverage, many livestock producers send livestock to market early, fearing these extreme heat days," he said.
"In August, NSW saw extreme heat days, well above average August temperatures, which meant livestock were taken to market early."
Finally, a better understanding of drought management came into play.
Having lower stocking rates was an important lesson learnt from 2019.
Low point been and gone
The nice rebound happening now in the cattle market will likely hold, Mr Quilty believes.
History tells us the bottom has come and gone, he said.
"With previous cattle cycles, there is consistency in the relative size of the fall from top to bottom of the cycle. It's the timing of how quickly the fall occurs, and whether it will be repeated later, that is the challenge," he said.
One of the reasons for this is that livestock prices can absolutely bottom before the worst of the dry occurs.
In fact, that occurred in the last two cattle cycles, whereby the lows in all categories occurred early before the real dry set in, Mr Quilty said.
"The best explanation is that 'you can only kill them once', meaning that once the herd has been liquidated, you start running out of cattle," he explained.
"The heavy liquidation associated with the two previous droughts happened early as the market prepared itself for drier conditions."
Mr Quilty said given that the outlook from Art Douglas, global meteorological advisor, is for El Nino to last until June 2024, a similar pattern could be unfolding now.
"That would mean the low has now been experienced and even though conditions remain drier in 2024, prices will move higher - no different to the last two cattle cycles," Mr Quilty said.