Slaughter and prices see-saw

Cattle slaughter and prime prices see-saw


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Interstate drive: Thomas DeGaris & Clarkson's Hayden Lambert, with pilot Paddy Ward and Phil Harding, Condobolin, NSW, who sold 29, 14-month-old Hereford steers to a top of $840, or 252c/kg, and av $778 at Mount Gambier store sale last week.

Interstate drive: Thomas DeGaris & Clarkson's Hayden Lambert, with pilot Paddy Ward and Phil Harding, Condobolin, NSW, who sold 29, 14-month-old Hereford steers to a top of $840, or 252c/kg, and av $778 at Mount Gambier store sale last week.

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PRIME cattle prices dropped again in early trading this week, despite likely future supply restrictions and a rising global market.

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PRIME cattle prices dropped again in early trading this week, despite likely future supply restrictions and a rising global market.

The ongoing dry seasonal conditions and sky-high grain prices are limiting lotfeeder, backgrounder and restocker competition on young cattle, and while slaughter is above year ago levels, buyers are still struggling to get their hands on enough heavy product.

This is demonstrated by the fact that while the medium and heavy steer eastern states indicators fell after Monday’s sales, both are the only two cattle price gauges trading above year-ago levels.

The heavy indicator, sitting at 263.20 cents a kilogram on Monday, lost nearly 8c/kg after the first day of the week’s markets, but still sits more than 2c/kg above the same time last year.

If we look how the heavy steers are tracking so far this year however, the average heavy steer eastern states saleyard indicator for January was 261.69c/kg - the lowest monthly figure since May 2015.

Processor concern about obtaining enough lots above 400 kilograms heading into the autumn after prolonged drought and recent flooding in Queensland is more evident in the heavy steer Over The Hook indicator, which averaged 518.92c/kg carcase weight for January, and is averaging 512.64c/kg for February so far.

This compares to 480.22c/kg and 473.13c/kg for January and February respectively last year. Queensland is paying the biggest premium OTH for heavy steers, averaging 522.69c/kg for February so far, compared to 505.47c/kg in NSW and 497.86c/kg in Victoria.

Feeders steers are also paying more when sold in the paddock, with the February average to date ranging from 275c/kg to 322.50c/kg across the weight ranges, compared to 266.87c/kg in the saleyard.

The National Livestock Reporting Service quoted the bulk of the feeder steers making from 210-285c/kg at Wagga Wagga, NSW on Monday, with an increased number of buyers struggling to acquire enough cattle above 400kg.

The Eastern Young Cattle Indicator, sitting on 459.25c/kg as of Monday, is also trending at its lowest monthly average since 2015 (April) for February at 496.03c/kg.

According to Meat & Livestock Australia, the 713,806 cattle processed in eastern states so far this year is up 9 per cent on the same period last year, and 17pc more than 2017.

The EYCI has dropped the same percentage (9) as slaughter has risen this year, reported NAB Agribusiness Economist Phin Ziebell in his latest commodity price update.

He predicts the EYCI to hover around the 450c/kg mark for the first quarter of this year.

“January 2019 was the hottest on record for Australia and many parts of the north have seen a disappointing wet season so far,” Mr Ziebell said.

“There is a major issue for many north-west Queensland graziers as flooding claims the life of potentially hundreds of thousands of head of stock."

January 2019 was the hottest on record for Australia and many parts of the north have seen a disappointing wet season. - Phin Ziebell, NAB Agribusiness Economist

But further south, Mr Ziebell said grain was scarce and remains very expensive.

Selling strong: The Landmark team in action during the store cattle sale in Cooma, where Angus weaner steers topped at $970 on strong demand while yearling steers sold to $1190.

Selling strong: The Landmark team in action during the store cattle sale in Cooma, where Angus weaner steers topped at $970 on strong demand while yearling steers sold to $1190.

“On the other hand, demand for finished cattle remains strong and global markets are looking fairly healthy (although the US – China trade war will be closely watched)," he said.

“If weather improves, there is likely to be elevated restocker demand and upside for the EYCI, but a dry autumn will be a challenge.”

While increasing global demand and the Australian dollar is supporting export prices, it is the weather which will dictate cattle prices in the short term.

The Bureau of Meterology released its ‘first look’ at the autumn forecast last week and as MLA deciphers it, it shows “no strong indication of a significant turnaround in seasonal conditions”.

“Nationwide, no major production region has been given any more than a 50pc chance of receiving ‘above average’ rainfall during autumn,” MLA said.

The outlook is particularly poor for eastern Queensland, central NT and southern NSW.

It also points to a continuation of ‘above average’ daily maximum temperatures. BoM also noted the general decline in autumn rainfall for southern regions in recent years.

The hunt for greener pastures continues with some producers willing to travel to southern markets for better prices. 

NSW farmer Phil Harding, ES Harding & Co, Condobolin, NSW, flew down for the recent Mount Gambier store cattle market, where he sold 29, 14-month-old Hereford steers for an average of $778.

His top draft, 333 kilograms, sold to Creek Livestock at $840 or 252c/kg. He usually runs a 400 head Poll Hereford breeding operation, with 3500 Merino ewes, but has had to destock with only 100 mm of rain on his Condobolin property for 2018 and 15mm falling so far for this year

Neighbour Gavin Stuckey trucked 600 Shorthorns south, so Mr Harding took the option to fill a couple of pens and sell his Hereford steers. 

The story Slaughter and prices see-saw first appeared on Stock & Land.

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