Markets

Dry conditions bite hard down south

Tom Dawkins, 25/02/2013

 

South Australian independent livestock agent Jeff Emms at the Mount Compass saleyards, south of AdelaideSouthern livestock producers are in the clutches of extremely dry conditions, with most regions heading towards autumn in desperate need of some meaningful rain relief.

Cattle are being offloaded in local saleyards, with the massive combined yardings across South Australia, Victoria and southern NSW in the past fortnight further undermining markets which have been precariously balanced for much of the summer.

Numbers at southern prime markets appear to have retreated back from the spike in yardings earlier this month, but has it has thus far failed to inspire any real positive signs for producers, with prices erratic at best, amidst a continuing stream of plainer cattle.

The only relatively positive sign at last week’s sales have been for better lines of younger cattle, which is in line with reports that trade and processor buyers are becoming increasing selective in their bidding.

In SA, large numbers of pastoral cattle are being trucked south and offloaded in saleyards which are already under pressure due to depleted local paddock conditions.

Large consignments of cows and calves, as well as cull cows, are delivering minimal returns for station vendors, many of whom are being forced to clear stock due to a lack of water rather than feed shortages. Truckloads of station cattle have been consigned to the South Australian Livestock Exchange north of Adelaide, where the poorest lightweight cows have sold below 50c/kg liveweight.

The more assured cattle districts in SA’s South East are also feeling the pinch. With limited rainfall being recorded since early spring, normally valuable lucerne stands are struggling to cope with the prolonged dry conditions. Even the generally reliable Adelaide Hills and Fleurieu Peninsula is all but exhausted of feed.

Adelaide Hills independent agent Jeff Emms says a below-par winter in many districts has exacerbated the dry spring and summer conditions.

“We lost store buyers from the market last winter,” Mr Emms said.

“They started to peel-off in June – they stopped attending sales and that lack of store stock enquiry was very difficult to handle.

“It’s the first time in a number of years that it’s been dry on such a widespread scale.”

Mr Emms said pastoral cattle (local term for cattle from South Australia’s extensive grazing areas further north) were causing market headaches, with poor seasonal conditions in the north coinciding extremely weak restocker demand in the south.

“Prices for those lines of station breeding stock have just collapsed,” he said.

“A well-bred cow in forward store condition isn’t worth much more than $400, which is a shame to see.”

“We’re not used to those prices because we’ve had a pretty good run of it in recent years.”

Mr Emms said even the best cow/calf units had copped a whack, with prices retreating from $1400 a unit to $800-$900.

And while current seasonal conditions have been very difficult, he believes more uncertainty looms as producers look to feed their cattle in autumn and winter.

“Last year, because of the cold winter and generally dry conditions, we went through the previous year’s hay pretty quickly and started buying hay again in August,” he said.

 “Talking to producers, the average hay cut was 20-50 per cent below a normal year, the tonnage just disappeared. It’s now at a premium, with a lot cereal hay making $100 a roll.”

“Taking that in account, I’m really not sure what we’re going to do to feed our stock in the winter months.”

Another independent agent, Kym Endersby, said the absence of restocker competition in the cattle had seen prices drop.

“Processors and lotfeeders have been able to bring the prices back because there’s just been no paddock competition,” he said.

Based at Mount Compass on the Fleurieu Peninsula where his company Prostock hosts a weekly independent agents cattle sale, Mr Endersby said despite the tough seasonal conditions, there had been no marked increase in yardings.

“We just haven’t had any summer rain – not even the normal stormy stuff which can give us a bit of quick green pick,” he said.

And the longer the dry lingers, the bigger the anticipated impact will be on the market.

“I’m expecting there to be a widening gap between prices for stores and prime cattle, especially given the poor quality of the cattle coming out of the pastoral zone now,” Mr Endersby said.

“If things keep going the way they are and the dry continues, I’d think that gap between stores and fat cattle could be huge.

“There’s likely to be a reward for those producers who are able to finish their cattle well and are prepared to spend some money in doing that – and rightly so in these conditions.”

At last week’s Mt Compass sale, Mr Endersby said feedlot enquiry was operating at 150-165c/kg.

“That was a bit stronger than last week, but feeders can still make money buying at that sort of rate.”

Given the longer-term feed uncertainty, it is little surprise that cows have been the most exposed to weaker prices. Looking at figures recorded by MLA’s National Livestock Reporting Service, indicator prices for cows of about 180c/kg carcase weight are a very long way behind average rates closer to 270c/kg cwt that was being paid just 12 months ago.

While the bumpy market ride will continue for as long as vendors continue to offload cattle, it is hoped that more stable numbers in autumn might provide some solid footing for prices to being to recover.

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