Markets

Producers hold marketing whip handle

James Nason, 18/05/2011

Cattle producers throughout eastern Australia appear to the holding the marketing whip handle for the first time in years as they enter a winter season, thanks to the large body of grass many are carrying through from a wet summer.

A good base of feed has given many producers the option to take or leave market rates as they see fit – individual cash-flow considerations aside – a rare occurrence at this time of year.

In Southern Australia, Landmark’s south eastern region livestock manager Will Nolan said markets strengthened slightly last week as numbers of cattle were held out of saleyards.

Mr Nolan covers an area from south eastern South Australia through to Southern NSW and said there was feed “everywhere”.

“There is a lot of feed in the paddocks so people are not actually pushed into selling,” Mr Nolan said. 

After travelling through southern NSW last week where he saw an enormous body of grass, he said he did not see the numbers of stock that might normally be expected given the good conditions.

“It’s either an indication that the numbers aren’t there, or from a trading perspective the capital is not there to buy at the prices you have to buy at. It’s likely a combination of the two.”

He added that while many producers had a good entry into winter, a lot of areas would also soon be looking for more rain.

In northern Queensland, Townsville-based livestock agent Tim McHugh, Hogan and McHugh, said it was a similar story.

“With the abundance of grass and cattle doing so well now, people aren’t breaking their necks to grab these prices,” he said.

“There is a bit of resistance and they are prepared to sit and wait.”

Mr McHugh said lead times to abattoirs were also shorter than normal, indicating that supplies were still quite tight.

“I don’t think there is a surplus of cattle,” he said. “I think people are prepared to say no and throw the gate and let the cattle go and just wait and see.”

Quotes for the live export trade to Indonesia came back this week by 20c/kg to $1.75/kg. Prices usually dropped at this time of year in line with an annual rise in supply as post-wet season mustering commenced and producers looked to lighten numbers in the approach to winter.

This year however the combination of grass and the lingering effect on supply that damage caused by Cyclone Yasi to road and fencing infrastructure in January could make the exporters’ job of sourcing cattle that much harder.

In Southern Queensland, Kurt Wockner, the livestock manager for Nippon Meat Packer’s Oakey plant, said that while some Channel Country stations had commenced their turn off, others had made a decision following recent price corrections to hold off and add further weight before selling.

With many cattle in the channels gaining a kilogram per day, some stations were not planning to commence their turn-off until June and planned to make cattle 30-40kg heavier before selling.

“Even if the returns don’t improve a lot, they will have probably recouped another $120 a head if they leave them for an extra six weeks anyway,” Mr Wockner said.

““They’re in no hurry, they’ve got plenty of feed.”

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