The new year surge in cattle prices is serving to flush big numbers of stock out of paddocks and into saleyards, with major centres reporting large increases in cattle drawn for sales this week.
Roma for example yarded 3000 head at its opening weekly store sale of 2015 last Tuesday, but has drawn 8000 for tomorrow as producers look to take advantage of the new price levels.
Dalby is set to follow last week’s 3300 head yarding with close to 5000 this Wednesday.
Rockhampton-based livestock agent Corbmac Fanning expects the Gracemere combined agents to assemble another 3000 head this Friday following the 3200 yarded last Friday. Gracemere normally yards in the 800-1000 head range for the first sales of the year.
Dubbo looks set to increase from 3100 last week to 4000 cattle this week, David Armitage at Ray White Rural estimates.
Agents at Wagga Wagga have drawn for 7500 cattle at today’s sale, up from 4500 last week, according to NLRS reporter Leann Dax.
Yardings in Victoria’s largest cattle selling centre, Wodonga, will swell to double their normal size with more than 5700 booked for tomorrow’s prime sale.
Manager James Thompson thinks the yarding may be a record for a prime sale in the Northern Victorian Livestock Exchange.
‘We’ve never seen this before’
A recurring comment in almost every conversation Beef Central has had with market analysts, experienced stock agents and cattle producers about the recent surge in cattle prices is “we haven’t seen this before.”
The Eastern States Young Cattle Indicator has never before jumped by 65c in a little over one week.
Steers that were selling for $1.70.kg in closing sales last year are now suddenly commanding $2.70.
Is there further upside left?
With demand still underpinned by solid fundamentals, the answer will hinge largely on what rain falls in coming months.
Meat & Livestock Australia’s Ben Thomas says it is difficult to compare the current market to what has happened before, because “this hasn’t happened in the past”.
However, expect volatility in coming weeks, he advises, as individual producers assess their seasonal position and stocking rates, and the collective results of their decisions impact on cattle yardings and restocker demand.
The two main options before them are to offload available cattle now and capitalise on what are very strong prices, or to hold onto stock and put on a few more kilograms, in anticipation that the market will remain strong in coming months.
“They are two different schools of thought and so we’re expecting a fair bit of volatility,” Mr Thomas said.
“Offering some encouragement is that the processors and those in Queensland in particular lifted their prices 30-40c last week as well.
“That indicates that processors are offering fairly decent prices as well so it is not just the store end of the market that is strong.”
As the large numbers of cattle drawn for sales around Australia already this week show, producers are already making the decision to take advantage of higher prices by selling now.
Recently retired livestock agent Graham Board from Dubbo said the current money should get cattle moving out of paddocks.
‘If they don’t come now, they’re not out there’
“If they don’t come now, they’re not out there,” he said.
Peter Daniel, managing director of Queensland agency network Grant Daniel Long, said the need for cash flow would be a strong motivation for producers to sell in coming weeks.
“Everyone has kids going back to school and they need money and they have got to get over Christmas,” he said.
“Traditionally in January and February everyone gathers up what they can when the market starts off well after a bit of rain, it is all cash flow driven.”
The rising prices are a welcome boost to industry confidence and great news for those with cattle available to sell.
However the situation is still tough for the many drought affected producers who will have to now try to restock at these new price levels, and particularly for those yet to enjoy seasonal relief at all, with places areas such as Longreach, Richmond, St George in Queensland and Walgett and Coonamble in NSW among the worst affected.
The replacement cost of breeding cattle has suddenly become a lot dearer in recent weeks.
Mr Daniel said restockers now had to pay $1.70/kg or $1.80/kg just to beat meatworks buyers on boner cows.
“Normally you can get back in and buy a few cows and fatten them for a few months for a bit of cash flow, but having to pay $1.70 or $1.80 for a store cow is a big pill to swallow if you sold your fat cows for $700 or $800 last year.”
Rod Turner at Landmark at Roma said further falls of rain of 40-85mm in the Maranoa in the past week was likely to further fuel restocker demand at tomorrow’s weekly Roma store sale.