North-south divide for beef cattle price
A STRONG link between cattle prices and seasonal conditions has been on show this March as the northern market steps away from the south.
It is evident in the latest price results for export slaughter cattle, with Queensland prices lifting above year-ago levels after rain fuelled improvements of up to 20c/kg.
In the south, NSW and Victoria saleyard prices are still flat-lining below the levels of early March 2017.
The disparity was queried by a northeast producer last week, who in a nutshell, had been hoping the rain in Queensland and parts of NSW would have provided a bigger price rally for heavy steers and enabled him to trade out of some expensive store cattle bought more than 12 months ago.
The latest saleyard averages, as calculated by the National Livestock Reporting Service, highlight the current north to south price divide:
At the close of trading last week:
The price indicator for medium cows in Queensland was 225c/kg liveweight (up 15c on a year ago). This compares to an average of 208c/kg in NSW (down 8c) and 191c/kg in Victoria (down 33c).
Heavy steers 500-600kg liveweight were at 285c/kg in Queensland (up 13c), compared to 275c/kg in NSW (down 26c) and a lower 259c/kg liveweight in Victoria.
In dollar terms, for a 600kg steer the price difference between the north and the south is equivalent to about $150, which is not to be sneezed at.
Data in the form of weather and supply explain why the market in Victoria has hit a ceiling this autumn.
The summer was extremely dry across most parts of Victoria, culminating in it being the driest February since 2009, according to the Bureau of Meteorology.
Some central and northeast areas recorded their lowest February rainfalls in 20 years.
Linked to this is how cattle numbers to processors are tracking.
The latest available slaughter figures (for the week ending March 9) lists the Victorian cattle kill at 23,747 — well up on the 19,230 processed in the comparable seven day period last year.
In Queensland, where late wet season storms dumped up to 200mm of rain, the opposite trend is evident.
The state’s cattle slaughter fell to 58,041 in early March, well down on the 68,725 that went through kill chains the same time last year.
To go back a step, there is evidence to show how the dry conditions that were prevailing in Queensland before the storms had forced cattle to be sold earlier than usual.
The Australian Bureau of Statistics just released its official data for January.
It showed total beef production was up 15 per cent year-on-year to 541,000 for the month, with Queensland production lifting to a rate 25 per cent higher than January 2017.
The upside of all these figures is that, if and when the south receives a decent autumn break, the market in Victoria should be able to rally along similar lines to the north. Particularly as the strong production trend line for the state in recent months suggest producers have also sold cattle early due to the pressure of the season.
At saleyards last week there were price improvements of 20-30c/kg for the best tradeweight slaughter cattle, with some high-yielding European-bred calves commanding up to 340c/kg liveweight.
Buyers at these markets acknowledged that a widespread autumn break would quickly change the supply dynamics for cattle in the south and lift prices.
For young cattle, rain would change not only supply but demand.
The Eastern Young Cattle Indicator shifted sideways this week, closing Monday night at 558c/kg carcass weight to be nearly 4c down on late last week.
Dig into the data behind the EYCI and it shows a big increase in the amount of young cattle coming forward after the market showed some improvement, prompting farmers still under seasonal pressure to push numbers forward.
The other interesting element is that feedlots are the dominant buyers, purchasing 51 per cent of eligible vealers and yearlings included in the EYCI calculations last week. Historical data shows that prices for young cattle always show the most improvement when restockers are more active and push the market, which requires widespread rain.