The Eastern Young Cattle Indicator is in imminent danger of falling through the 300c/kg barrier for the first time in at least three years, as the accumulation of disastrous saleyards cattle prices across Eastern Australia takes its toll.
The EYCI closed yesterday at 300.75c, about 76c/kg below where it sat this time last year, and the lowest number logged since 2009.
That’s been fuelled primarily by the huge outflow of plain cattle from desperately dry cattle supply areas in the westnern and northern regions of the three Eastern states.
Reports suggest that saleyards buyers are only tentatively purchasing stock, with restockers short on feed, while feeder and processor buyers are fully booked weeks in advance.
Saleyards prices for cows in central western Queensland as low as $20 a head this week have grabbed widespread TV and other media attention.
While there certainly have been prices as low as that paid for droughted stock this week, producers know that such values were for a very specific article – aged cows in light to backward store condition – and were not so reflective of cattle prices generally.
MLA chief analyst Tim McRae said it was cattle that were in extremely light condition or out of spec for restocker, feedlot or meatworks buyers that were attracting the heaviest discounts in the market. While still showing some big declines, cattle that were more attractive to buyers had held up a lot better, price wise.
“The market is obviously getting softer, everywhere, but quality always gets rewarded, even during times like this” he said.
“Prices for EU steers – both feeders and finished grassfed – MSA steers and heifers, good heavy steers and feeder cattle meeting lotfeeders’ specs are holding up much better,” he said.
“But there’s a much bigger price difference emerging between the better and the lesser cattle at present.”
“Looking at the state price indicators, they have obviously declined quite a deal, but are still respectable,” Mr McRae said.
Mr McRae said those producers closer to the coast that were fortunate enough to have a big body of feed this year were in many cases already fully stocked, and had little opportunity to go out and buy trader cattle – despite their obviously attractive price.
“They have already built-up herd numbers on the back of two or three big years, and their ability to handle more stock in many cases is limited. Very few appear to have empty paddocks with a heap of feed in them, allowing them to just step into the market.”
The best thing that could be said for the market at present was that despite the extremely high kills, Australian beef was still clearing into international markets very quickly.
“If China had not emerged, and other markets like the Middle East had not been so active, things could have been even worse,” Mr McRae said. “The domestic market can only handle so much surplus beef, and once it reaches that saturation point, prices can get a lot worse.”
Fortunately, the global strength for beef at present was in the manufacturing end of the market, and it was these cattle which comprised the biggest proportion of drought-affected stock currently being liquidated.
“A lot of the extra cattle coming in for slaughter – like older females held back earlier to produce an extra calf or two – are going to be supplying a product that the world is pretty much paying a record price for – albeit being eroded by the value of the A$,” he said.
The fact that 2013 was shaping up as an eastern continental-scale drought, rather than a regional drought, had made circumstances worse.
“The other factor is having such an extremely bad year after two such good ones, which has not allowed producers to adjust numbers more gradually,” Mr McRae said.
Eastern states physical markets this week
Total national cattle saleyard throughput during April increased 13pc compared to March, with significant increases reported in Queensland and NSW.
The continual supply of secondary lines from the northwest regions into Queensland’s southern saleyards has sustained downward pressure on prices. Large offerings of light weight yearlings, which were unsuitable for feedlot orders, received significant discounts at the majority of markets reported by the National Livestock Reporting Service.
In Queensland, saleyards numbers this week lifted a further 27pc, despite the big fall in market values seen recently. Numbers at Tuesday’s Roma store sale have been above 10,000 head for two consecutive weeks, as 13 Queensland shires across the state have been drought declared.
Large numbers of poor conditioned lightweight cattle continue to dominate markets in the north and west of the state, and as winter draws closer, large numbers of calves and vealers in southern regions are being weaned straight into the saleyards. Young cattle experienced a wide variation in price this week, as restockers were very selective in their purchases, with only top end quality lines receiving reasonable support. Prices this week took another big step back, amid reports of very low prices for large lines of cattle, which were reportedly undesirable for almost all buyers. Overall, the Queensland trade steer prices averaged 305¢/kg.
In New South Wales, consignments doubled at NLRS-reported markets this week (although the week previous was disrupted by Anzac Day). The continuing dry conditions lifted consignments at all markets with the exception of Tamworth, which remained consistent compared to the previous market. Dubbo yarded a large offering of 5150 cattle.
In Victoria, Overall yardings this week were 68pc higher than the previous short week. Most selling centres offered larger yardings. Quality was mainly mixed at all saleyards with many plain conditioned cattle over all categories coming forward in larger numbers. Well finished grown and young cattle are becoming scarcer by the week.
Given the current large size of the Australian cattle herd, reduced access to live export markets and the underlying negative impact of the high A$ on beef returns, there seems to be few positives on the horizon for northern Australian producers.
At the same time, southern producers are waiting anxiously for an autumn break, with rain the most likely factor to turn around the current price trend.
In a statement issued yesterday, Cattle Council of Australia president Andrew Ogilvie expressed his concern for northern producers over reports of record low cattle prices in Central Western Queensland.
"These reports are indicative of the critical conditions our northern producers are currently experiencing,” he said.
“These prices are the culmination of a number of factors including the continued fallout from the live trade suspension in 2011, suppressed market conditions and unseasonably dry conditions.”
“I fear that the situation will only continue to get worse, but CCA will continue efforts to make sure governments are aware of the situation,” he said.