Cat­tle re­port points to strong prices

North East & Goulburn Murray Farmer - - NEWS -

MLA has re­leased the 2017 cat­tle mar­ket quar­terly fore­cast, with a pre­dicted carry over on year-on-year prices.

The big thing to come out is that the cur­rent cat­tle prices are ex­pected to re­main strong for 2017, but as the na­tional herd re­builds they are ex­pected to dip head­ing into 2018.

The re­port also states that low fe­male cat­tle slaugh­ter and high car­case weights have set the scene for 2017, with these two com­po­nents fil­ter­ing through to in­flu­ence the 2017 April Cat­tle In­dus­try Pro­jec­tions.

MLA’s man­ager of mar­ket in­for­ma­tion ser­vices Ben Thomas said fe­male cat­tle slaugh­ter over the Novem­ber 2016 to Jan­uary 2017 pe­riod was the low­est pro­por­tion of the adult cat­tle kill ever.

“Given the low fe­male slaugh­ter fig­ures, it con­firms that the wheels are in mo­tion for the na­tional herd re­build, with many pro­duc­ers likely to take ad­van­tage of the cur­rently low fod­der and grain prices to carry stock through,” Mr Thomas said.

“The av­er­age car­case weight for Aus­tralian cat­tle was the high­est ever dur­ing the sum­mer months – the re­sult of a higher pro­por­tion of cat­tle on feed for longer, heav­ier grass­fed cat­tle com­ing through the sys­tem, as well as the sig­nif­i­cant drop in fe­male slaugh­ter.

“The short-term im­pact is beef and veal pro­duc­tion is now es­ti­mated to be 2.1 mil­lion tonnes cwt for 2017, down just one per cent year-on-year, rather than be­ing down three per cent as orig­i­nally fore­cast in Jan­uary.”

Mr Thomas said after trend­ing down­wards from Novem­ber 2016 to early March 2017, cat­tle prices re­ceived an in­jec­tion of life from the wide­spread March rain­fall, caus­ing a sig­nif­i­cant rise across all cat­e­gories.

While the Jan­uary es­ti­mate of 7.1 mil­lion slaugh­tered head re­mains, much heav­ier car­cases will go a long way to al­le­vi­at­ing the con­strained sup­ply pres­sure, with the re­sult be­ing only a one per cent yearon-year de­cline in beef and veal pro­duc­tion.

Mr Thomas pre­dicts that, be­cause of the au­tumn break in some larger cat­tle pro­duc­ing re­gions, ex­pec­ta­tions are for more stock to be with­held, while the dry con­di­tions in south­ern Aus­tralia will re­sult in slightly higher than ex­pected turn-off than pre­vi­ously an­tic­i­pated.

The av­er­age car­case weight for Aus­tralian cat­tle was the high­est ever dur­ing the sum­mer months – the re­sult of a higher pro­por­tion of cat­tle on feed for longer regimes, heav­ier grass- fed cat­tle com­ing through the sys­tem, and a sig­nif­i­cant drop in fe­male slaugh­ter.

In fact, the most re­cent Aus­tralian Bureau of Sta­tis­tics (ABS) data has av­er­age adult cat­tle car­case weights av­er­ag­ing over 290kg for the Oc­to­ber to Jan­uary pe­riod.

“There have been brief stages in the past, namely 2011, when the av­er­age weight edged above 290kg, but never for four con­sec­u­tive months,” Mr Thomas said.

“Con­sid­er­ing fe­male cat­tle slaugh­ter is ex­pected to re­main rel­a­tively low for the du­ra­tion of 2017, and de­spite the po­ten­tially poor feed con­di­tions for south­ern Aus­tralia dur­ing au­tumn and win­ter, the av­er­age adult car­case weight has been re­vised slightly higher, to 291kg for 2017.

“As the fe­male com­po­nent is ex­pected to rise from 2018 on­wards, av­er­age weights are likely to dip back to 288kg in 2018.”

After trend­ing down­wards from Novem­ber 2016 to early March 2017, cat­tle prices re­ceived an in­jec­tion of life from the wide­spread March rain­fall, caus­ing a sig­nif­i­cant rise across all cat­e­gories.

Na­tional sa­le­yard prices re­sponded with heavy steers av­er­ag­ing 549¢/kg cwt for the first quar­ter, up 24¢ or five per cent higher than last year.

Sim­i­larly, medium cows aver­aged 16¢ (three per cent) higher, at 468¢/kg cwt, while trade steers were 622¢/kg cwt, up 52¢ (nine per cent) yearon-year.

“This start to the year sets up pos­i­tive ex­pec­ta­tions for the re­main­der of 2017, es­pe­cially con­sid­er­ing the first quar­ter of 2016 was in fact the pre­vi­ous record high for the pe­riod – which has now been ex­ceeded,” Mr Thomas said.

How­ever, while the mar­ket out­look for the next six months re­mains pos­i­tive for pro­duc­ers with cat­tle to sell, largely un­der­pinned by the on­go­ing very tight cat­tle sup­ply sit­u­a­tion, it’s a sce­nario that will not last for­ever.

Con­strained fe­male cat­tle slaugh­ter is likely to re­flect herd re­cov­ery, with the in­fant stages of that be­ing re­alised in the sec­ond half of 2017.

“Once num­bers do start flow­ing through the sys­tem, it is highly likely that Aus­tralian cat­tle prices – from heavy steers through to young cat­tle – will feel the weight of the ad­di­tional sup­plies, cou­pled with the gen­er­ally softer global beef mar­ket con­di­tions ob­served for most of 2016 and so far in 2017,” Mr Thomas said.

“Nev­er­the­less, 2017 cat­tle prices will prob­a­bly end up av­er­ag­ing very sim­i­lar to the record lev­els of 2016, be­fore trend­ing down­wards in 2018 and 2019.”

PHOTO: C Good­win

FORE­CAST RE­LEASED: The cat­tle in­dus­try quar­terly re­port has been re­leased by MLA Aus­tralia, point­ing to strong prices, a strength­en­ing na­tional herd and heav­ier slaugh­ter cat­tle.

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