Latest cattle market update

Volatility the order of the day

A full field of buyers (restockers, feedlotters and processors) competed for cattle and markets across the east coast last week, for the first time in months and pushed prices higher, however, trading turned south entering the last week with prices forfeiting hard won gains. Disruptions to processing schedules and price response supply fluctuations have created a significant amount of volatility.  

Providing strong market support were surging US grinding beef prices, the good autumn break received across the eastern states and improving feeding margins. 

A couple of points to note; Western Australian and South Australian livestock values are reflecting the tight seasonal conditions (which is not unusual as both these states have a predominant winter rainfall pattern) in those states.  

Also, most cattle indicators are still lagging well below year ago levels, despite a rise in beef prices since that time. That either indicates that the cattle market was overvalued this time last year or that cattle prices have some ways to run. It’s probably a bit of both, with solid processing margins and the strong outlook for global beef prices likely to sustain the momentum in cattle prices. 

US lean beef prices jump

Underpinning the cow market is a shortage of lean beef in the US as we head toward the US peak demand grilling season. US domestic production is declining as farmers stop liquidating the herd (pull cows out of slaughter mix), while Brazil have hit the quota allocation and are now subject to import tariffs. US imported lean beef prices are nearing the record high of 967Ac/kg and should provide strong support for the Australian beef and cattle index moving forward. The Elders cow market strength index is moving higher, indicating cows are undervalued at saleyards at current prices. 

Australian cow market indicators c/kg w

Table shows Australian cow market indicators. Source: MLA

North Asian prices to be helped by lift in US grinding beef sector

Heavy steer prices have enjoyed a strong month, despite the north Asian beef export price indictor being flat. Supressing these prices is the heavy numbers of market ready cattle in US feedlots. These values should soon get a boost from demand for round cuts from the processing sector looking to fill the void in US lean beef supplies. Also, we are heading towards the peak beef demand season in the US. This should flow into higher prices for US boxed beef and in turn higher prices in north Asian export markets. 

It will be interesting to watch US fed beef prices over the next month or two as they will need to lift to sustain current Australian heavy steer values. The Elders export cattle market strength indicator is in a neutral state indicating balance between export market prices and local cattle values.  

Australian heavy steer market indicators c/kg lw

Table shows Australian heavy steer market indicators. Source: MLA

EYCI strength bringing feeders to market

The Eastern Young Cattle Index (EYCI) performed strongly the past month, lifting 49c/kg to 626c/kg cw or 7.8 per cent before falling this past week. Feedlotters are eyeing better values for cattle fed for the domestic market and the chance to average down feed costs with the ability to secure cheaper grain compared to what they have been using since last spring. A good sign is that the EYCI has been improving despite increased availability in recent weeks.

EYCI c/kg cw

Table shows EYCI c/kg cw. Source: MLA

Seasonal concerns limits restocker demand

The good autumn break across most of the east coast encouraged some restocker interest in recent weeks, however, buying was curtailed as temperatures start to fall and feed growth slows. This can be seen in the easing of the Elders restocker strength index in recent weeks. The restocker index was 6c/kg down for the week but 5c/kg higher for the month.

Restocker steer indicator c/kg lw

Table shows restocker steer indicator. Source: MLA

Cattle kill running at a solid clip