Cattle market's silver lining

The silver lining to Victoria's cattle and beef markets


Backgrounders and lot feeders are expected to outstrip supply next year, following the mass sell-off of breeding stock and weaner cattle in 2018.


With Australia’s beef export markets continuing to expand and grow in 2018, producers are most reliant on the one thing proving to be more unpredictable than President Trump next year – the weather.

Photo by Laura Ferguson.

Photo by Laura Ferguson.

A well timed and widespread autumn break will no doubt boost cattle prices, as restockers look to refill paddocks from a diminished herd. And prices won’t kick off the New Year from an exceptionally low price.

While rates didn’t reach the record highs of the previous two years in 2018, the Eastern Young Cattle Indicator still trended above the five year average for all but three months of the year.

This was despite a 10 per cent higher adult cattle slaughter for the year to October, compared to the same period in 2017, according to Meat and Livestock Australia.

But without that long-awaited break falling, and a solid northern wet season to boot, just how the market will react is questionable. If it does, demand from for restockers, backgrounders and lotfeeders next year will surely outstrip supply, as breeding stock and weaner cattle have been turned off in droves through the lacklustre spring.

Landmark NSW’s John Settree said supply and demand would dictate the price had to go up.

“We’ve got a good, low Australian dollar at the moment which is helpful. There is a forecast that it will strengthen against US dollar mid-year next year but because of supply it should still be ok – we just won’t have the numbers,” he said.

“People will be keeping heifers that go into the domestic market, if their cull rates are usually 40pc they will be 20pc as they will need to build up their on breeding lines.”

Mr Settree said if the south got a better than 60pc of average rainfall autumn, prices for everything would take off.

“If the New England and northern NSW area get summer rain over the next month and get some feed growing in front of them, they should step into some of those weaner sales,” he said.

“People are looking for lines of steers now and probably thinking it is a good time to buy if they can get them at 320c/kg now, when they are looking at 380-400c/kg if the drought breaks.”

NAB agriculture economist Phin Ziebell said the EYCI – which av 510.53c/kg for the year as of December 18 - was being supported by the finished cattle price, as restocker prices struggled.

“Restocker demand should be boosted in the short-term by the recent rains from Cyclone Owen, but a dry outlook in Queensland, along with feed costs, will likely affect this,” he said.

“We see the EYCI sitting in the mid 400s to low 500s over the coming months.”

Mr Ziebell’s forecast for the AUD “remains in the 0.70 – 0.75 range” for the coming months. In 2016 and 2017, when the EYCI av 634c/kg and 601c/kg respectively, Australia slaughtered 7.28 and 7.15 million head of adult cattle. In 2018, the EYCI av about 100c/kg lower, dropping to 444.5c/kg in August, while an estimated 7.8m cattle were slaughtered. 

The country’s producers and its international markets are still poised to rebuild the herd, reducing slaughter rates and therefore increasing prices next year.

But before they do, most would have hoped to receive not rain but a crystal ball for Christmas this week, so as they could gaze towards Anzac Day and see if water was falling from the sky. 

The story Cattle market's silver lining first appeared on Stock & Land.


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