Latest cattle market update

National saleyard cattle indicator prices stabilised through November, despite a continuation of heavy local slaughter levels as large supplies of Australian beef sells well to strong global and domestic demand and steady prices.

Prices for lean manufacturing beef to the US have traded in a narrow range since mid-year, but have firmed again over the past month, assisted by a depreciation in the $A and a strengthening in demand for lower cost beef items. 

Outside of the US, Australian beef continues to sell well aided by the large differential between Australian and US cattle values which has made Australian beef more competitive. US beef exports to Asia are down 6 per cent (pc) on last year but down 22 pc compared to 2022 with much of this business shifting to Australia.

While national saleyard cattle price indicators are stable, they belie some significant shifts happening across the states. The strong start to the northern wet season that has delivered good rain to NSW and Queensland has seen cattle prices start to firm across northern markets by 20c/kg lw. The rain has convinced some producers to hold stock back for kills early next year with the promise of extra weight, which has tightened nearby supplies. Assisting the lift in prices has been an increase in live export buying activity across Queensland as NT pastoral cattle supplies are finished and cattle on the NT floodplain are not ready. Exporters are racing to send cattle to Indonesia while they have valid export permits (they expire at year’s end) and so they can be put on feed to be ready for Ramadan at the end of March.

Andrew Scott, Elders Livestock Account Manager in Queensland and NT said “our job is doing the reverse of Victoria. It's kicking across the board. Fat cattle included. JBS Swift put 20c/kg dw on their grid for cows, they're $5.50/kg dw. But basically, they've only got 3 weeks kill left. Saleyard prices are certainly way out in front of the hook’s quotes. Feeders on the Downs are $3.80/kg lw and they're making $3.80-4.10/kg lw in the yards.”

It’s a different story across the southern states where the poor southern wet season and the lack of follow-up rain after mid-October storms has feed reserves and dam levels dwindling. This has seen producers offer stock for sales 1 to 2 months ahead of normal which has pressured markets and seen southern cattle values fall by around 20c/kg lw. 

Rising prices in the north and falling values in the southern states has seen prices detach over the past month. One good sign though, is that northern rain and storm troughs are pushing deep into South Australia and Victoria which may mean the south could get more rain over summer than they did during the traditional southern winter wet season. Further rainfall will start to promote summer grasses and may slow down the premature southern turnoff.

Peter Homann, Elders National Livestock Manager, said “I’ve just bought a barge full of black EU steers for less than they are paying for Brahman feeders in central Queensland”.

Another point of note over the past month has been the further narrowing in feeder premiums for Wagyu, Wagyu X and Angus cattle. This is associated with a contraction in demand for higher priced beef items owing to a slowing in the Chinese market, contraction in food service sector, a shift in buying habits in Japan and cost of living pressures the world over.

Since the start of 2023, Wagyu sirloin prices have fallen 9 to 14 pc in stark contrast to a 38 pc rise in manufacturing beef prices over the same period. The fall in Wagyu beef prices is consistent across the range of cuts (sirloin, round, chuck, brisket) measured by the USDA.

Falling premium beef prices are showing up in a narrowing in the feeder premiums for Angus, Wagyu X and Wagyu. Angus feeder premiums have narrowed from around 40c/kg lw to just 9c/kg lw, while indications are that the normal F1 feeder premium of $2/kg lw has halved while purebred Wagyu premiums of $5-6/kg lw have done about the same, although it is a little difficult to be too definitive about specific margins given the wide range quality considerations.

Also working against the premium cattle market is the extended length of time on feed, cost of financing these cattle and the risk that high-end beef demand continues to contract through the feeding period. Some feedlotters have moved away from long-fed Wagyu focus on shorter fed cattle that can be turned over more frequently, negating some of the risk of feedlotting. 

Local cattle markets look set to remain mixed over coming weeks as the industry winds down for Christmas/New Year. Queensland has another two full weeks of processing left with most plants planning to close around 19 December and likely remain closed until the second week of January. In the south, processing schedules will be affected by holidays falling mid-week. Expect southern prices to remain depressed as processors work through pre-Christmas bookings on reduced capacity due to the holiday schedule.

Peter Homann, National Livestock Manager said “we're getting pretty good rains now, but still it's been dry. Prices have come back, works are fully booked, and we're coming into that Christmas period where it can be tough to sell stock. But everyone's talking positively about next year with processors offering contracts going out into the New Year.”

Looking forward to the New Year, Elders agents report that processors are upbeat about prospects for meat contracts and prices moving forward as industry processing capacity moves back into full swing from mid-January. The major caveat to a resumption in the positive cattle price trend would seem to come from US trade policy and its impact on Australia’s trading partners.

We expect to see renewed interest from restockers during 2025. Restocker demand has been notable for its absence in 2024 showing up in weak prices for secondary cattle and the unusually large discount for heifers. Uneven seasonal conditions and the impact on grazier confidence of the sharp correction in cattle prices during the second half of 2023 seems to be the reason. As cash flows strengthen from a strong grain harvest and better cattle prices, we should see a lift in restocker demand in 2025, providing seasonal conditions cooperate. We may currently be seeing the best restocker market opportunities for years to come.