SPORADIC restocker activity at early sales, combined with clear indications both lotfeeders and live exporters have the capacity to pump strength into the young cattle market, is delivering encouraging signs for producers scheduled to sell over the next few months.
The Eastern Young Cattle Indicator opened this week at 486.75 cents per kilogram carcase weight, down 6c on where it closed at Christmas and 16c on a year ago.
Analysts have described that as a modest decline and say given the limited trading over the Christmas period, it won’t be until more saleyards are online that a real indication of how the EYCI has moved will be apparent.
In the short-term, people were looking to the weather forecast – which does indicate some rain – to provide guidance on how the cattle market is likely to travel, Meat & Livestock Australia senior analyst Adam Cheetham said.
“We did see some ok rain across parts of the country over the break but not nearly enough to invigorate the market at this point,” he said.
The relative strength in the southern weaner market was a combination of limited supply – bushfires played a big role in that, although some producers were also reacting to before-Christmas market drops – and relatively better conditions in the south, analysts said.
Mecardo’s Angus Brown reported the good spring in southern parts of Victoria and South Australia helped put a floor under prices and plenty of lighter steers at southern sales have gone back into local paddocks.
Most processors have returned this week and reports are the majority are booked up for the next two weeks at least.
With kill schedules determined for some time, the influence processors will have on the market going forward is a big unknown at this stage and will likely not be evident for some time, analysts said.
“Feeder buyers are clearly still paying a premium, with the finished end offering favourable trading conditions for adding weight to young cattle and our expectations this year are numbers on feed will remain historically high,” Mr Cheetham said.
Live exporters have also provided good support in the south in the past fortnight, with buy-ups typically for Russian shipments.
Chief executive officer of Australian Livestock Exporters Council Mark Harvey-Sutton said as a general principle the fact demand across all live markets was so strong at the moment was having the effect of underpinning prices.
This was the case right through from northern cattle markets down to the south where Russia and the Chinese dairy heifer trade was in play, he said.
Live-ex equated to 10 per cent of the overall value of the cattle industry and industry figures showed 50pc of that value was returned to the producer, he said.
“This sector does represent a real market alternative and introduces good competition for cattle,” he said.
All forecasts point to live-ex demand continuing to be strong throughout 2020.
Some are questioning whether Australia will be able to meet that demand given the shrinking supply pool but Mr Harvey-Sutton said all indications were we could in the short to medium-term.
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