THE cattle market finished strongly in 2020 and many thought it couldn't go any higher, but if the first couple of weeks of 2021 are anything to go by the strong market doesn't look like abating any time soon.
It has been an incredible 12 months for cattle producers with prices soaring to record levels on the back of the drought breaking in the Eastern States.
This time last year the main talking point in the industry was the dry conditions being felt right across Australia that were causing producers feed and water shortages and in turn contributing to the national herd continuing to contract.
Fast forward 12 months to now and it is a different story especially in the Eastern States where there is an abundance of feed and producers are looking to restock with either breeders or turnover stock.
As a result of this demand, prices have gone through the roof pushing saleyard indicators to record levels.
In the Eastern States at the southern weaner sales which kicked off after new year, sensational prices have helped push the Eastern Young Cattle Indicator (EYCI) indicator to a new peak and the trend has also flowed through to WA.
The EYCI hit a record high 830.75 cents a kilogram carcase weight (CWT) last week as reported in Meat & Livestock Australia's (MLA) weekly statistics report for the week ending January 12, surpassing the previous record set in November 2020 of 829c/kg cwt.
When compared to the same week last year the EYCI is up 344c/kg.
The likelihood the EYCI will go much higher, however, is limited by the Australian dollar gaining ground which puts pressure on export prices and the slim margins now on offer for turning over weaners, analysts say.
Most seem to believe the peak has been reached but it will hold.
As for WA the story is much the same when it comes to record prices.
While there was some Eastern States demand for mainly lighter cattle before Christmas, it has gone to a new level since sales have kicked off in 2021 with both Eastern States feedlots and graziers chasing calves and breeders which has resulted in record sale results.
At the Nutrien Livestock Mt Barker Angus Weaner Sale in the first week of January 1696 weaners sold for an average of $1514 with steers selling from 416-500c/kg and to a $1925 top while heifers made 390-454c/kg to a $1568 high.
In comparison in the same sale last year steers sold to a high of $1218 and heifers $967 highlighting just how strong the market is this year.
The first two WALSA weaned weaner sales at Boyanup for 2021 have also been strong with steers selling from 400-530c/kg ($1045-$1835) and heifers 374-474c/kg ($905-$1663).
But it is not only weaner sales in WA which have seen the record books rewritten this season.
Prior to Christmas at the Elders Boyanup Supreme Springing Heifer Sale in December prices hit record levels when 743 first-cross heifers sold to a top of $3800 and an average of $2775.
Since then female sales have gone to another level on the back of Eastern States' buying support.
At the Nutrien Livestock Mated Beef Female Sale at Boyanup in the first week of January 439 PTIC beef heifers sold for an average of $2946, which was up $1033 on last year's sale average and to a high of $4100 to set a new national record for PTIC commercial Angus heifers.
The strong female sales continued at last week's Nutrien Livestock Great Southern Blue Ribbon Female sale at Mt Barker when 1165 breeders sold for an average of $2553, which was up from $1639 last year on the back of not only local WA buying support but also strong interest from Eastern States buyers operating on AuctionsPlus.
In this sale prices hit a high of $4050 twice for PTIC Angus-Friesian first-cross heifers to set a new State record eclipsing the record set at the Elders sale at Boyanup in December.
Nutrien Livestock WA manager Leon Giglia said the current position of the cattle market was exceptional and it was all due to a lack of supply and high demand.
"It is an understatement to say the market is at record highs, none of us have seen this level of pricing ever before," Mr Giglia said.
"The returns cattle producers are receiving, in particular what cow/calf producers have received for their weaners this season, are significant.
"At these levels it is the cow/calf producer which has made quantum gains in the returns and profit margins."
When it came to breeder sales Mr Giglia said they had also been very strong this season.
"People are suggesting the cost of breeding stock is extraordinary.
"But when you consider weaner sales have been averaging $1400 and it is not taking much for cull cows to make $1600 then a replacement breeder at around $3000 is market value.
"For many years it has been considered that the price of a weaner and a cull cow equates to the cost of a replacement breeder and that is exactly where the market is sitting."
On the live export front Mr Giglia said they were seeing strong enquiry for all classes of cattle.
"The unmated live export heifer market is a little bit quieter than normal but this is a result of the local market for these types being exceptionally strong," he said.
Going forward Mr Giglia said with all the information they have to hand the short term market looks like maintaining its strong levels.
"I think from here through to next spring these prices will be the norm with some fluctuations due to market and seasonal issues.
"I don't think we are going to see any big swings in the market with pricing not while the Australian beef herd remains in a rebuild phase."
Elders livestock sales manager - WA cattle Tom Marron said he has been involved in the industry for 50 years and has never seen the cattle market this strong.
"The market is extremely strong and producers are certainly getting great rewards for their efforts," Mr Marron said.
"It has not just been a strong market for the past 12 months, it has been a fluid market with the high prices running through all classes of cattle, irrespective if they are local or pastoral cattle.
"We saw some really high prices before Christmas but I think the sales in the past couple of weeks have probably been stronger on the back of large Eastern States interest on both feeder types and breeders and live export inquiry.
"At the moment and over the past couple of months the market has been underpinned by large enquiry from the Eastern States as it recovers and rebuilds following 10 years of drought.
"They have plenty of feed over there and are looking for stock.
"We are getting enquiries from over there for everything, from cows and calves, Friesians, Wagyus to beef weaners.
"They are looking for anything they can turnover to utilise the feed."
When it comes to live export opportunities Mr Marron said it looked positive for the next few months.
"There is some good live export enquiry at the moment which is mainly coming from Vietnam for slaughter cattle and this will see us load a number of boats out of Fremantle in the next couple of months."
Going forward Mr Marron believes the market should remain steady and strong for the foreseeable future on the back of low supply and good demand from all sectors.
"The availability of cattle across Australia is restricted and it's this which is fuelling current prices and will continue into the future."
Another good indication of where the market is sitting compared to 12 months ago are the WA cattle saleyard indicators reported in Meat & Livestock Australia's (MLA) weekly cattle indicator report.
In the report last week (week ending January 12) the Western Young Cattle Indicator (WYCI) was at 830c/kg CWT, medium steer at 386c/kg CWT and medium cow at 260c/kg CWT.
In comparison in the same week in 2020 the WYCI was at 542c/kg CWT, medium steer 274c/kg CWT and medium cow 189c/kg CWT.
In December when MLA released its cattle wrap for 2020 it said trying to capture how 2020 unfolded for the Australian cattle market was a difficult task, as pandemic-induced disruptions and changing seasons resulted in unpredictable situations unfolding.
MLA believes these unforeseen circumstances will carry impacts over into 2021 as the industry enters uncharted territory.
MLA said despite the challenges of 2020, the Australian cattle market performed well, which highlights the strength of the industry to adapt and the quality of the product being produced.
It said once the drought broke in the Eastern States restockers made their presence known in the market, with a change of season in key southern regions offering an incentive to rebuild herds.
The bounce-back was immense and the industry saw the largest continuous climb ever seen in young cattle prices - the Eastern Young Cattle Indicator (EYCI) sat at 477c/kg carcase weight at the start of 2020 and it rose 289c/kg by March 11, as rain came.
In its wrap MLA said the scene was set for a booming year in 2020 for domestic cattle prices before COVID-19 hit.
It said the impact of the pandemic was profound as it disrupted logistical supply chains, reduced food service demand, triggered trade tension and undermined the confidence of the Australian cattle market.
Border closures and plant suspensions also took a toll on the processing sector.
Domestically COVID-19 also had an impact on retail volumes, with these surging on the back of panic buying and increased cooking from home.
However on an export front volumes continued to dwindle and were down year-on-year and MLA is expecting there will be a slow recovery in many key export markets following the pandemic.
According to MLA's Australian beef exports monthly trade summary for December 2020 Australia's beef exports for 2020 totalled 1.039 million tonnes shipped weight (swt), which was back 15 per cent on 2019 levels.
Broken down Australia exported 301,950t swt of chilled beef which was down 2pc on 2019 levels while frozen beef exports were back 20pc on 2019 levels with 737,463t swt exported.
In 2020 Japan took back the mantle of the biggest importer of Australian beef from China taking 269,303t swt (down 6pc) made up of 153,714t swt of frozen product and 115,589t swt of chilled beef.
The United States was the next biggest importer of Australian beef taking 211,754t swt (down 16pc) which included 144,912t swt of frozen product.
China was the third largest importer at 196,696t swt (down 34pc on 2019) followed by South Korea at 160,850t swt.
Like frozen and chilled beef exports live export volumes will also be back in 2020.
In MLA's monthly trade summary for November 2020, it was reported Australia had exported 1,097,407 head of cattle for the calendar year-to-November, which is a fall of 13pc on 2019 volumes.
This has been made up of 637,379 head of feeder cattle (down 23pc), 304,305 head of slaughter cattle (up 12pc) and 155,723 breeder cattle (down 1pc).
A growing live export market for Australia according to MLA is Vietnam, despite the opportunities being limited to some degree by a reliance on cattle ready to be sent to abattoirs.
Vietnam operates without a substantial feedlot sector and is reliant on slaughter ready cattle, which have accounted for 82pc of cattle exports to Vietnam for the calendar year-to-November.
For the calendar year-to-November Vietnam took a total of 306,487 head making it our second biggest customer, which is up 18pc on the same period for 2019.
This was broken down to 251,650 head of slaughter cattle, 50,482 feeder cattle and 4255 breeder cattle.
Other live export markets that showed promise and record growth in 2020 were China, with cattle exports to the country at 148,516 head for the year-to-November, up 6pc on 2019, while exports to Malaysia were up 20pc to reach 24,302 head and exports to the Philippines were up 42pc at 22,982 head for the same period.
Indonesia was again Australia's largest live export market up to November 2020, taking 481,806 head, down 28pc on 2019 levels until the end of November, the majority of which were feeder cattle (476,443 head).