Cattle market falls faster, heavier than expected

Cattle market falls faster, heavier than expected


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EYCI drops below 500c/kg for first time since mid-2015.

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YET another week of unmet rain hopes in key cattle supply regions across the south-east is placing heavy downward pressure on cattle prices.

With many producers now looking to offload where they can to make room for breeders through what is shaping up to be a tough winter, it’s likely the market will continue to drop.

Offsetting the seasonal impact somewhat is the finished end of the cattle chain’s fortunes with a declining Australian dollar and rising United States cattle prices, both of which add to our competitiveness in the key US market.

The Australian cattle market benchmark measure, the Eastern Young Cattle Indicator (EYCI) is sitting at 497 cents per kilogram carcase weight, having dipped below the 500 mark this month for the first time since mid-2015, when the Australian herd rebuild began in earnest.

That hectic restocker activity took the EYCI to a never-before-seen breach of the 700c line in 2016 and has continued to hold the market above longer-term averages.

Projections have been for prices to come under pressure this year as supply increases but market analysts said the fall has been slightly faster and heavier than anticipated.

Meat and Livestock Australia market intelligence manager Scott Tolmie said the lack of decent follow-up rain since the March price lift, which came on the back of good falls in Queensland and NSW, had been a key factor.

The EYCI has dropped 60c since that short-lived rally, with restockers well and truly quietened down now.

“At this stage, the Bureau of Meteorology outlook for the next three months is mostly neutral so pasture growth is unlikely and that trend should continue,” Mr Tolmie said.

“There will be a floor but we can’t be sure where.”

Western Victoria and Tasmania do have the benefit of a forecast of above-average rainfall. Victorian consultants said if that start arrived within the next few weeks, trading activity should be “as normal” going into winter.

NSW, meanwhile, has had the driest first three months of a year in three decades and Queensland farmer leaders have described this week’s rain as “overall disappointing.”

The best of the isolated storms delivered up to 90mm west of Goondiwindi but the southern inland, between Mitchell and Charleville, received only 30mm in patchy showers and between Mackay and Mount Isa, there was nothing.

Agforce’s Bim Struss said the event had not provided enough to go forward on for the state’s cattle industry and with no indication of a decent break, people would be thinking they need to make decisions sooner rather than later.

Winter conditions were already starting to bite as well, he said.

South Australia agents, meanwhile, are expecting the reduced values recorded across NSW in the past two weeks to flow through.

Darren Maney, director at TDC, Penola, said the lower south east had received a start a fortnight ago in the form of 30mm.

However, absent of any summer rain, graziers are well below average on feed availability in paddocks and all the rain had achieved was to allow graziers to be comfortable with stopping selling, he said.

“We are still two or three good rains away before they start purchasing,” Mr Maney said.

The story Cattle market falls faster, heavier than expected first appeared on Farm Online.

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