Spring sees cat­tle mar­ket de­cline

North East & Goulburn Murray Farmer - - MINIATURE HEREFORDS -

THE start of spring has seen the Eastern Young Cat­tle In­di­ca­tor (EYCI) con­tinue its down­ward tra­jec­tory to a level that hasn’t been recorded for al­most two years.

This is a con­trast to the in­di­ca­tor’s up­ward trend dur­ing spring in 2015 and 2016, the re­sult of low US beef pro­duc­tion, a strong global beef mar­ket and fierce re-stocker de­mand.

The EYCI opened the 2017 spring sea­son at 551.50¢/kg cwt and set­tled on 521.25¢/kg cwt by Septem­ber 18, down 24.25¢/kg cwt.

Re­cent years has seen the EYCI ex­hibit sta­ble or pos­i­tive growth dur­ing the win­ter months, while some sea­sonal price dis­counts take ef­fect dur­ing spring when sup­plies typ­i­cally in­crease.

The EYCI did not find the sup­port dur­ing win­ter this year, how­ever, and is chart­ing new ter­ri­tory – even com­pared to the years of 2013 and 2002.

Aside from the sea­sonal sim­i­lar­i­ties of the three years, 2013 and 2002 also rep­re­sent the years where the EYCI de­clined sig­nif­i­cantly over the cal­en­dar year.

There are a num­ber of fac­tors un­der­pin­ning the correction in to­day’s cat­tle mar­ket - on­go­ing poor sea­sonal con­di­tions have driven in­creased turn-off and im­pacted buyer dy­namic, and de­te­ri­o­rat­ing pas­ture con­di­tions have damp- ened re-stocker de­mand.

The pre­mium typ­i­cally paid by re­stock­ers, over feeder and pro­ces­sor pur­chases, has nar­rowed.

In the first two weeks of Septem­ber, av­er­age prices paid for EYCI el­i­gi­ble cat­tle by the three buy­ing groups dif­fered by a range of 37¢/ kg cwt - this time last year the dif­fer­ence equated to around 60¢/kg cwt.

In line with sea­sonal trends, the pro­por­tion of EYCI el­i­gi­ble cat­tle sold to re­stock­ers dur­ing Septem­ber-to-date lifted on year-ago lev­els, reach­ing 36 per cent, but de­clined from re­cent months.

This was aided by a de­crease in com­pe­ti­tion from lot feed­ing on the back of re­cov­er­ing grain prices.

Pro­ces­sors, who his­tor­i­cally ac­count for ap­prox­i­mately a third of EYCI el­i­gi­ble cat­tle sales, have seen an on­go­ing de­cline through­out 2016 and into 2017.

Look­ing ahead, a re­cent sea­sonal break for parts of Vic­to­ria and a fairer three-month rain­fall out­look by the Bureau of Me­te­o­rol­ogy may boost re-stocker de­mand and pro­vide some sup­port to the mar­ket in the short term.

Mean­while, any wide­spread sea­sonal break in the north is likely to have a longer last­ing ef­fect on de­mand due to the ham­pered re­build­ing ef­forts and lower base from which these pro­duc­tion sys­tems are com­ing from.

GO­ING DOWN: Meat and Live­stock Aus­tralia have re­leased their spring mar­ket report, record­ing a de­cline in the Eastern Young Cat­tle In­di­ca­tor.

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