Richard Koch, Elders

Elders analyst Richard Koch provides this regional cattle market summary following a regional livestock managers’ hook-up each week

CATTLE values have fluctuated with rain and weather forecasts over the past week, but fundamentals remain largely unchanged.

Internationally, beef prices have improved in USc/lb (90CL cow beef is +11USc/lb since the start of the year). Good demand and stronger US domestic prices continued to support US imported beef values with US cattle slaughter and supply hampered by severe winter storms during January and February.

Offers from Australian and NZ exporters are limited with strong volumes on offer from Brazilian suppliers, market reports suggest. But while the market is stronger, export returns have been dampened by the rising $A (-A36c/kg)

No signs yet of any issues stemming from Chinese import restrictions with export volumes suggesting solid export market demand.

The local market has been under pressure from hot and dry conditions from Central Queensland south, but just when you think the market is about to take a step backward, the promise of significant rain has kept prices in check.

Slaughter cattle are supported by lack of supply in the south. Feeders and restockers will be supported by recent QLD rain that will tighten supply from northern and central areas until after Easter, and will see some buying head south to support southern markets that are under pressure from the tight season.

Season-defining rain?

Forecasts for season-defining rainfall through the northern Australian cattle region and down through the interior were a major influence on northern markets last week.

Firstly, it created some urgency around securing nearby supplies for southern QLD processors with some over the hooks rates moving higher. But it also created some renewed buying enthusiasm for restocker cattle from QLD backgrounders trying to secure stock to utilise feed reserves.

While last week’s weather system was a little disappointing for some, another significant system is forecast for the next week (see BOM eight day forecast map).

BOM rainfall forecast to 26 Feb

If the rain eventuates, its sets parts of northern Australia up for arguably their best and most widespread wet season in this cycle.

The scope of the wet can be seen in its impact on northern extensive zone cattle operations, which are yet to get going this season. The live export sector is off to a very slow start with some exporters choosing to squeeze out of their boat contracts by sub-chartering to long haul exporters (dairy to China).

The high cost of cattle combined with the difficultly of moving enough cattle to fill a boat is deemed too risky. Diverting boats to Townsville is not an option, given its supply areas are only another decent fall away from being under water again.

Charters Towers held its first sale of the year with just 1500 yarded with very few slaughter cattle and mainly restocker cattle of mixed quality.

The JBS export abattoir at Townsville is only really operating due to cattle being trucked up from much further south, while other regional works through the north sourcing only enough cattle for three days’ work per week.

Central Qld

But while most the northern industry is waiting to see how the remainder of the wet season plays out, restocker activity across central QLD stepped up a couple of notches in the last week.

Weaner cattle have starting to firm across central areas with the feed. Central is ahead of your clean or western markets which is highly unusual. Normally Roma and Dalby are 20c/kg lw ahead of central Queensland markets, but that’s not the case at present. Best weaner steers $5.60/kg and weaner heifers $4.58/kg.

Southern Qld

The rain has been a bit hit-and-miss across southern QLD and west of Miles with dams that aren’t serviced by bores starting to go dry. Downs around Dalby and north of Dalby very good but dry down around Toowoomba. The rain last week has eased the situation somewhat, but follow-up rain will be needed through southern QLD.

The mixed seasonal conditions across southern and south-west QLD are being reflected in saleyard numbers with 8500 (+1600) at Roma and almost 6000 at Dalby last week which are very solid for this time of year. No market at Roma this week as they thought they would be washed out by the rain.

Very hot and dry conditions have seen restocker cattle in the doldrums in southern QLD but there was a definite step-up in activity at Downs saleyards last week with interest coming from local backgrounders, the Burnett and Longreach. One buyer was into heifers 260-300kg, starting at $3.90/kg lw and pushing them to $4.20-4.25/kg.

Feeders

The feeder market has steadied to $4.80-4.90/kg lw Downs for flatbacks $5/kg for Angus feeders. Some of the major feedlots rather than taking feeders to 150 days for China are killing them now to ensure they get as much into China as they can before the quota is hit. Most Downs feedlots have around two weeks worth of cattle in front of them.

Now that the rain has gone through, some producers in central and western QLD will be able to sit on their feeders through until after Easter, having got that second big fall and with the forecast looking good for more follow-up rain. This will support the Downs feeder market into Easter.

Southern QLD slaughter markets held steady with over the hooks rates $8.30/kg dw for bullocks and $7.50c/kg for cows.

Illustrating the tightness of the season outside of central and northern QLD national cattle slaughter nudged a very robust 160,000 head last week. Conditions in large southern livestock regions remain tight.

NSW

The quality of the recent yardings at Dubbo saleyard are reflecting the season. The odd pen of good heavy kill cattle but a fair portion of the yarding has been plainer quality, particularly the cows and light weaners.

NSW Pastoral areas have been saved a big destock by the rain with stock south of Broken Hill, likely to be moved to the north, where they have received good rain of up to 100mm in the last few weeks.

Some areas in the central west and western Riverina into the central tablelands were also spared by the rain. There will be plenty of fodder crops sown this weekend and this will give a reprieve from the heavy yardings through some of the supply areas. There is a strip through NSW north of Warren and south of Narrabri that is very dry.

Slaughter markets remain firm across NSW with MSA kill cattle $9-9.40/kg dw, unchanged and supermarket contracts high $8’s/kg to early $9’s/kg dw.

The NSW feeder market is hard to get a read on this week. Angus $5-5.30/kg lw with existing contracts being delivered on while British bred crossbred cattle are being bought out of the paddock at $4.70-4.85/kg lw.

Southern feedlots think they only have another month supply of heavy Angus feeders left in the south, so they will head north again looking for supply. Angus feeder premiums could start to firm earlier this year around Easter, rather than during winter.

The Wagga market is indicative of the struggles brought on by the big dry in the south. The southern and eastern Riverina largely missed out on recent rain with a solid yarding of just shy of 6,000 cattle of mainly secondary quality more suited to lot feeders and restockers.

Export and trade slaughter cattle were in short supply and the bulk of the yarding sold to stronger feedlot and restocker demand with a pickup in northern restocker buying. Medium weight feeders (330-400kgs) to $4.75/kg lw and steers (280-330kgs) back to the paddock sold to $4.90/kg lw.

Water is a major issue across the region with dams empty and springs drying up in the hills with around 90pc of stock offered supplementary grain at a cost of $3-4/kg of weight which is still a return on investment at current livestock values.

Victoria

The Victorian restocker cattle market is holding up well with solid support from local backgrounders at the Wangaratta feature weaner sales despite concerns about the seasonal outlook for feed and water in northern Victoria. Agents in and around Wangaratta and Wodonga purchased more than half of the 5300-head yarding with steers averaged $4.88/kg lw and heifers averaging $4.15c/kg.

Slaughter cattle across Victoria are being supported by the shortage of suitable weight cattle with prices remaining firm to slightly dearer across most categories the exception being some medium and lighter weight cows this week.

South Australia, Tasmania

Seasonally smaller yardings are the order of the day across south-east South Australia. Like in Victoria, numbers of suitable slaughter cattle are tight with graziers preferring to hold them and add weight whilst the grass is available.

Further south in Tassie heavy easterly winds last week dried the place out but some more rain is in the nearby forecast.

With conditions still reasonably dry and plenty of numbers around the Tassie cattle market had a bit of a reset with cows 30-40c/kg dw back in over the hooks markets to $7.30-7.40c/kg, prime yearlings/Jap bullocks lost 20-30c/kg to sit at $8.50-8.60c/kg.

The pullback in slaughter cattle rates affected the Powranna store sale last Thursday where 2500 cattle were yarded, good heavy cattle 400kg were back 30c/kg lw, medium steers 300-400kgs back 20c/kg, lighter restocker steers were steady at $5.50c/kg, but the heifer portion back 20-30c/kg for heavies and medium weights off 10-20c/kg.

In WA, cattle prices were stable with feedlots chipping away buying cattle keeping the market supported. Cows steady at $3.20-3.40/kg lw with reasonable supplies still coming in. Heavy weight grown steers averaged $3.60/kg and heifers sold to $3.40/kg. Yearling steers +400kg sold from $3.80-4.18c/kg while yearling heifers made $2.88-3.80c.