Drop in money for processing cattle hard to explain but likely now shifting

Most expect upward movement in finished cattle prices soon.

April is typically tricky in processing due to short kill weeks but the underlying dynamics are strong, with United States demand underpinning a solid global outlook.

Yet processor cow prices last week fell to their lowest level since the first week of 2024.

Heavy steer prices are back 26 cents a kilogram live weight from the start of April and processor cows 19c, but both indicators today have turned the corner, albeit it very slightly.

Elders southern livestock manager Matt Tinkler said on top of short kill weeks, it was starting to get dry in the south which was pushing supply up and putting downward pressure on prices across the board.

"It's not panic stations but it now looks like we had a false start with rain at the end of March and the hoped-for autumn break is not coming, which is creating a bit of anxiety," he said.

"Many in the south are supplementary feeding now, where they haven't needed to in the last three years."

Mr Tinkler said northern demand was also not eventuating to the extent people had hoped, with many putting that down to freight costs being a significant consideration.

"Good processing cattle should start to make money from now though, as we get into a situation where there is less supply, with the longer-term picture for overseas demand good," Mr Tinkler said.

"There is definitely optimism about where things are heading."

Meat & Livestock Australia market information analyst Emily Tan said the export market had seen a notable price correction with buyers not participating.

Most indicators eased last week with feeder steers the exception. This came on the back of growing demand for lightweight yearling steers to return to paddocks where rain had fallen in Queensland, Ms Tan said.

The northern cattle feeder steer price rose with the rain also serving to slow supply from Queensland paddocks.

The Argus Meat and Livestock report said feedlot buyers seeking prompt delivery of cattle to fill holes due to weather disruptions have had to raise offers to attract numbers, due to producer unwillingness to part with livestock for less than a premium.

StoneX analyst Ripley Atkinson said with the US moving into grilling season, support for cow prices should improve as winter progresses.

There was no doubt processors were making excellent margins on cows at the moment, he said.

Episode 3's latest report on beef processor profitability says things are now back in the normal range after profits peaked in October last year when cattle prices bottomed and export values were booming thanks to tight US supplies.

By spring, bigger volumes of kill cattle are expected but the hope is that growing demand in the US will snap up what Australia has to offer.

Clear skies and warmer temperatures should be driving solid weight gains in cattle right now, translating to more beef production later in the year, Mr Atkinson said.

National Australia Bank's Beef in Focus report, released this week, says cattle prices will remain elevated over the next year, supported by improved restocker demand thanks to better seasonal conditions and healthy export demand.

NAB group economics associate director Lea Jurkovic said the value of Australian beef exports had been on the rise since 2020-21 and had recently been supported by higher export volumes.

"Looking forward, strong export demand and an expected increase in saleyard prices will likely contribute to an increase in the turn-off rate," Ms Jurkovic said.

"Both MLA and ABARES expect the herd to decline over the coming years as slaughter rates increase, though MLA expects a sharper decline earlier."