MLA: Where will cattle prices finish in 2011?

Beef Central, 14/10/2011

Meat and Livestock Australia's Meat and Livestock Weekly today contains the following analysis of where prices could finish in 2011, based on historical trends over the past decade:

Analysis of weekly national average cattle prices, as collected by MLA’s National Livestock Reporting Service (NLRS) from the first week of October through to the final full selling week of December highlights a very consistent seasonal trend in prices over the past 10 years.

Prices across all categories traditionally fall in the final quarter of each calendar year – primarily due to the seasonal increase in available cattle supplies.

Heavy steers: Since 2001, heavy steer prices have finished the final full selling week of December lower than the first week of October in every year – averaging a decline of 8pc annually.

Again, this market response is largely due to the increased numbers of heavy cattle that
enter markets as seasonal conditions dry off into summer, particularly in Queensland.

Medium steers: For medium steers, 2010 was the only exception in the past 10 years, largely
attributable to the very wet finish to the year. On average since 2000, medium steer
prices have finished December 6pc lower than the first week of October. 

Cows: Interestingly, national cow prices also average 8pc lower through the period, with
the only exception to the decline in prices for the past 10 years in 2010 (up 2pc).

Trade cattle: For trade cattle, prices have finished lower in eight out of 10 years, averaging 6pc lower, with the two rises recorded in 2007 (up 2pc)
and 2010 (up 4pc).

So can we expect a continuation of the lower trend for the final quarter of 2011?

Given that many of the indicators as at the first week of October 2011 were at historically
high levels compared with the past 10 years, a decline by December would seem likely.

Indeed, heavy steer prices were the highest on record for the first week of October, at
360¢/kg cwt, while trade steers (405¢) and cows (306¢) where the second highest in the
last 10 years, respectively.

Added to the likely lower seasonal trend is the continued tough competitive position of
Australian beef to Japan, along with the ongoing economic uncertainty and high A$ – all
factors that can push prices lower by December.

If prices are to finish the year higher than the first week of October, it will be largely
dependent upon rainfall across major supply regions, and subsequently, how many cattle
will flow into markets.

While rainfall influenced higher prices in 2010, going against the
seasonal trend, prices in 2011 are already 8% higher than in 2010, combined with
comparatively weaker export conditions and a higher A$. Indeed, the A$ could also play
its part by depreciating, but recent weeks has proven that forecasting where the A$
heads is fraught with danger. – Meat & Livestock Australia



Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Beef Central's news headlines emailed to you -