THE impact of drought across large expanses of Eastern Australia is evident in this cattle market review for the 2013 year issued by MLA this morning.

 

The summary is broken into four seasonal cycles – summer, autumn, winter and spring

 

Lack of sufficient rainfall across much of the east coast in key producing areas was the feature for the 2012-13 summer, with rainfall ‘below average’ across large swathes of the country. This, coupled with high slaughter levels, became typical for 2013, and yet despite the high A$ towards the end of 2012 and into 2013, keen processor demand was evident, especially throughout January.

 

Consignments through the summer months were generally unchanged year-on-year, despite a 20% rise registered in Queensland, with close to 560,000 head offered throughout NLRS reported saleyards across the eastern states for the three months. Interestingly, compared to the five-year average, total numbers were back 3%, as Queensland was offset by reductions in throughput across NSW, Victoria and SA, down 4%, 2% and 18%, respectively.

 

Cattle prices generally started the New Year at similar levels to those registered in December, however, as throughput increased in 2013, prices slipped marginally. Interest from the processing sector improved, despite the A$ remaining relatively high, while restocker demand was subdued.

 

The Eastern Young Cattle Indicator (EYCI) declined almost 20¢ from December, to open the New Year at 313¢/kg cwt, however, managed to recover towards the end of February (by 4.5¢), to average 336.25¢/kg cwt. With little-to-no consistent rainfall in the southern states, which historically assists in keeping prices buoyant at this time of year. The commencement of the annual weaner sales saw producers keen to restock, although prices were relatively subdued compared to year-ago levels.

 

The national heavy grown steer indicator started December averaging 177¢/kg lwt, back 19¢ year-on-year, with reduced demand from processors, as prices remained volatile through much of the season. At the end of February, heavy steers were 173¢/kg lwt, up from a low of 163¢/kg lwt at the start of the month. The lack of demand was predominantly seen through NSW, although prices across Queensland markets also varied, as processors reported ample supply, limiting the need to travel south to secure cattle.

 

The national medium cow indicator averaged 125¢/kg lwt through summer, with very few price movements, yet prices averaged 20¢ lower year-on-year. Nevertheless, it must be noted that producers at that stage were retaining breeding lines, thus well-finished cows were in short supply, consequently assisting prices. Cow supply through 2012-13 started to increase as the dry weather persisted, with little relieffrom the poor seasonal conditions in key supply areas, as more cows were reportedly being sent direct-to-works.

 

Average weekly eastern states slaughter slipped marginally (1%) year-on-year, however, were at historically high levels, as producers opted to offload greater numbers due to ‘below average’ rainfall recorded for the season. Despite the strong A$, processors continued to work at very high levels, with total slaughter rates up 16% year-on-year. The bulk of the increase in numbers came through February, as a large influx of cows and yearling cattle started to flow.

 

Direct-to-works rates throughout the summer period continued to decline from December, especially across the yearling steer (260-280 kg cwt), grown steer (300-420kg cwt) and medium cow (280-320kg cwt) categories, as oversupply started to place downward pressure on prices. Rates declined 30¢ on average across all categories, as yearlings finished on 313¢/kg cwt at the end of summer, back 29¢, while grown steers averaged 25¢ lower, on 308¢/kg cwt. Cows lost the most ground, declining 36¢, to finish on 256¢/kg cwt.

 

It is common for feeder buyers in the summer months to generally be booked well in advance through the Christmas period, as all saleyards take an annual shutdown. In contrast to 2012, when prices were much higher, the oversupply of feeder weight cattle through January and February saw prices decline. Despite scattered showers restricting some cattle movements in early February, prices continued their downward trend as the season drew to a close. Prices averaged 193¢/kg lwt from December to February for domestic steers, back 35¢ year-on-year, while short fed prices followed a similar trend, declining 21¢, to average 181¢/kg lwt.

 

As autumn commenced, producers had little reprieve from the summer drought conditions, although rainfall across parts of southern Queensland and the east coast of NSW did see a slight surge in restocker and feeder interest. However, as the season progressed, conditions worsened and numbers started to flow in greater proportions, not only through saleyards but also through processing plants. Restocker and feeder buyer interest declined significantly into May, affecting overall prices, although strong exports was one positive for the market.

 

Despite persistent dry conditions across the eastern states, turnoff declined slightly (3%) year-on-year, with consignments through the southern states all recording a decline. Compared to the five-year average, eastern states throughput lifted 15%, underpinned by a rise in Queensland, up 29%, while all other states eased from 3% to 4%.

 

Cattle quality started to decline, especially for yearling lines, as feed quality deteriorated and plainer conditioned cattle started to flow in greater numbers, particularly in May. There were reportedly good quality bullocks still available from western regions, although the majority of throughput consisted of lightweight steers and heifers.

 

Cattle indicators through the autumn months all followed a similar downward trend, as processors, feeders and restockers were reluctant to purchase stock, with most buyers reportedly at capacity.

 

The Eastern Young Cattle Indicator (EYCI) declined from the start of March through to May, with the oversupply of lightweight lines suitable for restockers. The three-month period generally sees the peak turnoff period for weaner and yearling lines, however most saleyards were overwhelmed, and prices trended lower. The EYCI dropped to its lowest level for the year halfway through May, at 278.75¢/kg cwt, down from 390.50¢/kg cwt at the same time in 2012, however, as rain fell in some parts of SA and NSW, albeit at reduced levels, restocker interest improved and the EYCI finished the season around 298¢/kg cwt.

 

The national grown steer indicator averaged 181¢/kg lwt at the start of March, yet finished the season averaging close to 174¢/kg lwt. Mid-way through May saw a large influx of bullocks through saleyards, pushing prices to a low of 159¢/kg lwt – a level not seen since 2001. Exports increased through May, supported by a weakened A$, however the oversupply in cattle outweighed the demand for slaughter-ready cattle.

 

Medium weight cows followed a similar trend, as prices trended lower on the back of high supply. The last two years of herd rebuilding tapered off and many producers opted to send cows direct-to-works, as pasture conditions worsened. At the beginning of March, cows averaged 129¢/kg lwt, however reached a low of 93¢/kg lwt throughout May. Prices recovered, assisted by the decline in the A$, to average 101¢/kg lwt.

 

Slaughter through autumn was well above year-ago levels, increasing 15% across the eastern states. The large volume of cattle processed through the season was a direct result of the prolonged drought conditions across western Queensland and NSW, as turnoff intensified. Victoria also failed to receive significant rainfall from March to May, pressuring producers to offload stock as feed levels dwindled.

 

Direct-to-works rates declined, on average, 24¢ across the yearling steer (260-280 kg cwt), grown steer (300-420kg cwt) and medium cow (280-320kg cwt) categories. Processors continued to ease rates, and yearling steers averaged 310¢/kg cwt, back 17¢ year-on-year, while grown steers declined 19¢, to average 300¢/kg cwt. Cows

had the greatest loss year-on-year, back 36¢, averaging 243¢/kg cwt, based on the large number of cows offloaded throughout the season.

 

Feeder rates continued the downward trend throughout autumn, with numbers heading to feedlots increasing. The large turnoff affected feeder demand, with the majority reportedly booked well in advance from March through to May. Lightweight cattle were reportedly placed on feed originating from western regions earlier than usual, as the availability of feed became increasingly scarce. Consequently, domestic steers averaged 187¢/kg lwt for the season, back 27¢ compared to autumn last year, while short fed lines were back 19¢, to average 172¢/kg lwt year-on-year.

 

 

During 2013, the winter period saw varying rainfall conditions across the country, with ‘below average’ falls recorded throughout much of Queensland, coupled with ‘above average’ minimum temperatures. The scarcity of rain across many northern cattle supply regions placed further pressure on producers heading into an anticipated poor spring season, with prices lower compared to winter 2012. In contrast, parts of south-west WA and much of south-east Australia had ‘above average’ falls, assisting ideal pasture growing conditions for producers.

 

Total national cattle yardings throughout winter were 3% higher compared with the corresponding period last year and 4% on the five-year average, totalling 637,333 head, underpinned by producers offloading a greater proportion of young cattle due to the deteriorating season. Consignments across Queensland and Victoria contributed mostly to the gains, up 9% and 7%, compared to the same period last year, and while the majority of states yarded fewer numbers, overall totals increased.

 

The commencement of winter saw national prices increase steadily across all categories, as cattle supplies began to tighten leading into the colder months. Average prices trended dearer towards the end of August before easing into spring, as the chance of ‘above average’ rain was unlikely, along with restockers becoming less active.

 

At the start of June, the Eastern Young Cattle Indicator (EYCI) averaged 299.75¢/kg cwt and reached its highest level for winter 2013 in the first week of July, at 330.50¢/kg cwt. Demand for cattle lines suitable to restock increased throughout the three-month period, as producers were hopeful of some decent winter falls, particularly across much of NSW, however, Victoria and Tasmania saw most of the rain. As a result, the quality of cattle across much of northern NSW and Queensland mainly consisted of plainer conditioned lines, with a higher proportion of lightweight cattle coming forward.

 

Medium and heavy steers also met with increasing demand from feeders and processors for the June-to-August period, averaging 168¢/kg lwt and 179¢/kg lwt, respectively, across the country. However, prices were down 6% and 5%, respectively, year-on-year, with a higher percentage of cattle offloaded, as feed levels reflected a drier than usual season conditions leading into spring. Similarly, feeder steer and cow prices averaged 12% and 9% lower, respectively, compared with a year ago, yet demand assisted prices by the end of August.

 

Eastern states weekly slaughter throughout winter averaged 149,476 head per week, 17% higher than the corresponding period in 2012, as a result of the poor seasonal conditions, giving producers little option other than to offload.

 

Consequently, over-the-hooks rates across the eastern states eased in comparison to year-ago levels, with yearling steers (260-280kg cwt) down 4%, to average 311¢/kg cwt, attributed to subdued restocker interest. Prices for grown steers (295¢/kg cwt) and cows (244¢/kg cwt) also averaged lower for the three months, down 6% and 9%, respectively, over the same period, underpinned by heightened supplies direct-to-works.

 

Throughout winter, domestic feeder rates rose steadily following autumn, with indicative prices reaching their highest for the year at the end of August. Domestic feeder steers (280-350kg) started June at 179¢/kg lwt, to average 185¢/kg lwt for the three months, down 12% compared with year-ago levels. Similarly, domestic feeder heifers (280-350kg) commenced June at 163¢/kg lwt, to average 166¢/kg lwt across the eastern states, down 16% over the same period, with subdued demand from lotfeeders in comparison to last year.

 

Much of Australia experienced some of the warmest temperatures on record throughout spring 2013, as a number of supply regions, mainly in Queensland and NSW, recorded ‘below average’ falls, with a vast majority of Queensland drought-declared.

 

The typically dry northern spring pressured northern producers to further reduce stocking rates, as numbers continued to flow in large quantities. Additionally, reports suggested northern producers were sending young cattle to southern selling centres towards the end of spring, anticipating better prices. In contrast, September saw decent rain across south-west WA, with good growing conditions and quality pastoral lines well-supplied. Similarly, south-west Victoria and Tasmania recorded ‘above average’ spring rainfall, assisting prices in the south through early October.

 

During spring, consignments across the country totalled 704,007 head, up 4% from last year and on the five-year average, caused by greater numbers yarded in NSW (27%), Victoria (18%) and WA (10%) compared to spring 2012. Conversely, throughput across Queensland declined 27% year-on-year, underpinned by greater numbers offloaded mid-year, coupled with producers more inclined to hold onto stock leading into an anticipated early wet season.

 

The spring period saw national prices ease further succeeding winter, with decent falls across the country unlikely to transpire. Average indicative prices were lowest towards the end of October, as large numbers persisted through physical markets across most states, before gradually trending higher leading into December.

 

The start of September saw the Eastern Young Cattle Indicator (EYCI) average 316.75¢/kg cwt, before subsiding below 300¢/kg cwt for the three-month period, at 289.50¢/kg cwt in late October. Greater numbers of plainer conditioned secondary lines continued to flow through most selling centres, contributing to price declines during spring, as well as more lightweight cattle. In addition, supplementary fed lines in the southern markets increased in proportion at physical markets, assisting prices into November, despite dearer feed grain prices.

 

National prices fluctuated during the three-month period, with medium steers averaging 169¢/kg lwt, down 3% on year-ago levels, yet reaching 177¢/kg lwt by the end of spring, buoyed by increased feeder demand. Similarly, heavy steers averaged 183¢/kg lwt, down slightly (1%) year-on-year, with prices settling on 185¢/kg lwt in the last week of November, as processor interest strengthened. The national cow indicator also averaged lower (3%) compared to spring 2012, at 126¢/kg lwt.

 

Weekly slaughter across the eastern states was 12% higher compared to the corresponding period in 2012, averaging 152,570 head per week. Greater demand from export buyers reported at physical markets, combined with increased processor interest, boosted slaughter levels throughout spring, with a larger proportion of heifers and cows processed.

 

As a result, eastern states direct-to-works rates were lower compared to last year, with yearling steers (260-280kg) averaging 319¢/kg cwt, down marginally (1%) year-on-year. Grown steers also eased, down 2% on year-ago levels, at 308¢/kg cwt, as the dry seasonal conditions boosted supplies going to slaughter. Similarly, cow prices averaged 10¢ lower over the same period, at 258¢/kg cwt.

 

The spring period saw prices for domestic feeder cattle ease through to the end of October, before increasing into November. Domestic feeder steers (280-350kg) averaged 182¢/kg lwt across the eastern states, back 9% from year-ago levels, finishing spring at 188¢/kg lwt, as feeder buyers were keen to secure suitable lines towards the end of the year.

 

Similarly, domestic feeder heifers (280-350kg) averaged 15% lower over the same period, at 163¢/kg lwt, concluding the three-month period at 169¢/kg lwt. Feeder demand continued to improve as spring drew to a close, as the availability of feeder cattle dwindled and buyers looked to secure enough cattle through the Christmas period.

 

Source: MLA