Market impact: Rain affect mostly on short-term supply

James Nason, 26/02/2014

Last week’s rain has had an instant supply-related impact on store cattle markets, but has fallen short of what is needed to trigger a significant increase in restocker buying interest, MLA's chief economist Tim McCrae believes. 

“I think it was enough rain to impact supply but I don’t think it was enough rain to impact demand,” Mr McCrae told Beef Central.

“For a lot of people it was a great sight to see, and gives them the chance to consider holding cattle that they may have been looking to sell if nothing changed, but I don’t think it was enough generally speaking to have people jumping into the market.”

The Eastern Young Cattle Indicator has shot up by 15.75c/kg in the past week to 311.25c/kg today, largely in response to rain-related cutbacks in supply.

National saleyard throughput reported by the NLRS was down 8pc on last week, which in turn was 27pc lower than the previous week.

The impact was most noticeable at Roma yesterday were agents yarded just 1500 head for the weekly store sale.

Mr McCrae believes it will take more rain to activate significant restocker buying interest.

On that front many are watching the progress of another rainfall system that is currently working its way through New South Wales this week.

“As a general comment, from what we’ve seen so far, most places may now get an average February rainfall-wise, but we now need an average March, if not above average,” Mr McCrae said.

“The rain we have seen has been nice but it is no where near enough to really turn things around.”

Livestock agents Beef Central spoke to yesterday said producers who still need to offload cattle in the approach to winter should have the opportunity to do so in a more timely manner now that the market is not under as much supply pressure as it was prior to the rain.

The rain could also prove timely for Blackall’s first sale of 2014, a weaner sale scheduled for March 27.

After returning to weekly sales in recent years, the Blackall Combined Agents have not held a sale since mid-November last year due to the impact of drought on the market and the deteriorating condition of cattle.

Jack Burgess from Grant Daniel Long said the recent rainfall in the Central West should deliver a timely boost to local restocker buying interest ahead of the Blackall weaner sale in one month’s time.

“Obviously, people who haven’t got a lot of feed in their paddocks will give it another month before they can see six inches or a foot of buffel in their paddocks before they go and buy a few cattle, but we would expect to see a bit of restocker interest for that sale now that it has rained.”


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