Markets

Cattle flow surges as rainfall tap turns off

James Nason, 18/07/2013

Dalby stock agent Peter Daniel says the best advice he can give to clients in the current supply-saturated market is to sell cattle only if they absolutely have to.

“And a lot of the answers we’re getting now are ‘We absolutely have to’,” Mr Daniel, the head of Ruralco's Southern Queensland subsidiary Grant Daniel Long, said. 

“They're saying 'We’re out of feed or water, or we can’t hold them, we need the money'.”

It is the kind of conversation that underscores just how desperate the situation has become for thousands of producers across vast areas of dry inland Australia.

After destocking earlier this year to create space in paddocks and buy time in the hope for relieving rain, options have now dried up for many.

Combined yardings of more than 17,000 cattle at the Roma and Dalby store sales on Tuesday and yesterday respectively are the manifestation of the financial and seasonal pressures now driving forced sales as the rainfall tap remains firmly shut off.

Water drought

The big issue now for many is a lack of water.

Most rivers and creeks in western Queensland haven’t run since the floods of early 2012, and surface waters are now also succumbing to months without rain.

Even those with enough feed in their paddocks to carry cattle through winter are reporting to agents that they no longer have the water needed to hold them.

It is a conundrum because dams that have never previously gone dry, including many that made it through the 2002-2009 western Queensland drought intact, have suddenly run out of water, and within just two years of what were some of the wettest summers in memory.

Why that has happened is subject to speculation. Some point to an exceptionally poor summer and hard winter rainfall wise, others question if the fact that many western properties are now running more cattle than sheep might also have played a role by putting more pressure on surface waters.

Whatever the reason, thousands of producers have suddenly found themselves in the same, very dry boat – out of water and out of time and now forced to destock cattle onto a market no one wants to sell onto.

Landmark Charleville livestock manager Marc McKellar told Beef Central this week that the water situation had become surprisingly bad very quickly and was affecting producers across a vast area from far western Queensland to Roma. 

“They have had to bite the bullet and sell into a market that is pretty ordinary,” he said.

“Others have just given buyers terms on cattle and said pay me in three months, just to get them off the place.

“Basically they haven’t got the water or the space to keep them.”

Peter Daniel said prevailing price levels meant producers were probably selling cattle for around $200 per head less than they would have budgeted for at the start of the year.

Even cattle that were bought out of yards such as Roma in recent months were said to be returning for sale because their buyers no longer had the water to keep them.

Mr Daniel said he believed most producers had opted to sit back until June 30 in the hope of receiving relieving rainfall, and then had no choice but to destock again, triggering the current wave of cattle now coming forward.

“I don’t think after this wave there will be another one as big.”

Selling next year’s income

Peter Daniel and Marc McKellar both expressed grave concerns about the long term implications of the current situation for producers.

Many were effectively being forced to sell next year’s income because they no longer had the feed or water to carry younger cattle through, and available prices were so low they had to sell more cattle than usual to cover their repayment commitments.

“If six months ago you sold four decks of steers to make an interest payment, well now you have to sell eight,” Mr McKellar said.

“All the young cattle that would be next year’s income, well they’re gone for maybe half of what they’re worth.”

Peter Daniel said the financial situation was truly becoming desperate for many.

“There is massive financial pressure out there,” Mr Daniel said.

“I don’t think people realise how bad it is

“Everyone these days has to sell something every six months to meet their commitments with the bank, and a lot of people would have sold into next year’s cattle already.

“It will take a long time to recover from this.”

Mr Daniel told Beef Central that he expects the current wave of cattle to run out by August.

“There will be still numbers about, but there will be no weight in the cattle,” he said.

“I think good export feeder cattle with plenty of weight and the right specs will recover quicker than most.

“We’re trying to hold cattle back until August or late August at the moment.” 

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