Cattle supply dynamics hark back to 1990s, Weekly Grill told

Beef Central, 12/06/2023

Current livestock market supply dynamics are reminiscent of the early 1990s, Beef Central’s Weekly Grill podcast which aired last Friday was told.

Matt Dalgleish, EP3 and Chris Howie, RMA.

“We are just having an old fashioned 1990’s period supply glut,” RMA general manager, Chris Howie, explained to host Kerry Lonergan.

“… we have got all of those cattle that came out of the Top End and went into the channel country, they have been there for two years now, now they’re starting to come out.

“So we have just run into the perfect storm, we have got overseas demand but we’ve just got too many hitting the market at the same time.”

With US cattle prices rising to record levels in April, heavy steer prices in Australia are now about half the price of equivalent heavy steers in the US, EP3 market analyst Matt Dalgleish observed.

The increased price competitiveness of Australian cattle is driving a big increase in export volumes, including a 40 percent increase  in Australian beef exports to the US in May.

Exports to Japan, China and South Korea were also all up in May, Mr Dalgleish noted.

Having diverse markets firing at a time when production and turnoff is set to increase with drier weather was a big positive.

“I think we are in a fortunate position that globally the appetite for red meat protein is going to be pretty strong, so we will have plenty of places to deliver.”

Host Kerry Lonergan noted that PTIC Wagyu Angus heifers, worth $3500 just before Christmas, are transacting for around $1700 now.

That spelled opportunity, the market watchers suggested.

”I still think that anything that you can buy one and turn it into two is an opportunity for you,” Chris Howie said.

“The prices have come off significantly on heifers although last week we did see them kick a bit, $100-$120 in some of the store sales around the place.

“But over the last two months what you would call a trading heifer, she has come off about $450 in value… I think there is a real opportunity in heifers.”

In the full 23-minute podcast interview the market watchers also offered their thoughts on market issues ranging from processor and feedlot margins and retail meat price trends to the potential impacts of the Federal Government’s proposed ban on sheep exports.

With weather foreasts pointing to a drier year ahead and increased turnoff patterns, the podcast also heard how upgraded and reopened processing plants and investments in efficiency improvements are set to help the processing sector handle the additional numbers likely to come forward in the next few years.

Both also offer their thoughts on a hypothetical question – if they $100,000 to invest in livestock now, with a rider that whatever they purchase must be turned over by the end of the year, what would they buy?

To listen to the full 23 minute podcast interview click here


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