Australia’s grainfed beef market has entered a period of decline, after steady increases in recent years had resulted in record levels of cattle on feed in the December 2019 quarter.

Negative demand pressures from COVID and increased store competition following an improved season have seen feeder buyers struggle to compete with restockers for the limited supply of suitable cattle, MLA says in a market report issued today.

The domestic paddock feeder steer indicator for the week ending 25 September was reported at 408.75c/kg live weight, 114¢/kg higher on both the start of the year and year-ago levels.

Finished grainfed cattle prices have fluctuated throughout 2020 in response to a number of changing market dynamics. Following the emergence of COVID-19 in Australia in March, all national OTH categories, as well as the Queensland OTH 100-day grainfed steer indicator, reported declines as demand for finished product plummeted (see more on this in yesterday’s 100-day trading budget report).

This was reflected in grainfed beef exports, which totalled 93,954 tonnes shipped weight (swt) in March, back 8pc on year-ago levels. Through May and June, both grassfed and grainfed OTH indicators rallied, with the Queensland OTH 100-day grainfed indicator reaching a record high of 670¢/kg cwt in the last week of June.

However, since the beginning of July, despite operating above year-ago levels, the Queensland OTH 100 day grainfed steer indicator has been tracking down, as ongoing uncertainty in key export markets continues to place downward pressure on grainfed demand. For the week ending 25 September, the indicator was reported at 626c/kg, 44c below the record set three months prior, yet 35c/kg above year-ago levels.

Grainfed loses premium

As reflected in this earlier story published on Beef Central last week, the grainfed OTH indicator is currently operating at only a 2c/kg premium to the national OTH heavy grassfed yearling steer indicator, which was reported at 624c/kg for the week ending 25 September.

This grainfed premium is in contrast to the 42c/kg premium the grainfed OTH indicator held over the grassfed indicator at the beginning of the year.

Exports of grainfed beef aligned with the decline in the grainfed OTH indicator, with exports for July totalling 88,786t, back 23pc year-on-year, while August volumes were back 27pc on year-ago levels at 78,000t. Grainfed exports for the year-to-August are sitting 9pc below year-ago levels, at 720,500t.

Source: MLA