Long way to go before certainty

It has been 77 weeks (October, 2012) since cattle prices were last seen at this current trading level – a level that most cattlemen would consider as break-even value.

The level that I refer to is easily benchmarked by the industry's Eastern Young Cattle Indicator (EYCI), which this week lifted a further 13 points to close trading, Tuesday, at 352 cents a kilogram.

The EYCI has been on a constant downward spiral for the past two years. It has fallen from a peak of 405c/kg in November 2011 to a bottom of 285c/kg during that wretched extreme weather in January.

The mid-way point between these two extremes is 345c/kg, which was only broached during this week's scurried markets.

The 67 points or 25 per cent rise in the index since the market bottomed in January as a consequence could easily be construed as a return to the good times.

However, it should be remembered there is still a long way to go before cattle producers can safely say they have certainty in their opportunities to breed and supply cattle profitably for the processing sector, which has ridden a high in export volumes and price for some considerable time.

As a result, a surge this week of 30 per cent in the Victoria cattle supply must be seen as a demand driven event.

With bullock prices up 25-28c/kg during the past two weeks, the number of bullocks that have flowed into saleyard markets has surpassed any previous muster of bullocks in this State for the past decade and a half.

While there have larger overall weekly yardings penned at regional saleyards across the past 15 years, the numbers of bullocks offered, which topped 5000 head this week, has, as yet, dent the appetite of market.

This show of confidence in the saleyards market has occurred due to the inability of over-the-hooks prices to keep pace with the physical market.

During the past two weeks, "direct to works" quotes for bullocks has risen merely 10c/kg dressed weight, compared to an equivalent rise of 44c/kg in the market prices.

The same can also be said for the rise in market cow prices. These have lifted by 20-25c/kg or 39c/kg dressed in the physical market, compared to an average lift of 19-20c/kg dressed over-the-hooks.

The two shortened weeks for selling and processing that faces the industry during the next fortnight due to Easter and ANZAC public holidays should provide adequate time for the market to re-assess its position.

There is no denying an acute shortage of quality prime stock exists across the entire length and breadth of the Eastern States. But, one thing can be guaranteed, southern Australian cattle producers hold all the supply-aces now the entire region has had the perfect start to autumn.

A controlled release of the southern cattle that have been stored during the past spring and summer is now paramount so markets don't become swamped sending prices into reverse.

It is true export cattle prices are humming along nicely and it is also evident the trade market has buyer pressure mounting as well.

Top-end prices of vealers and yearlings in the physical market that were two weeks ago priced at $2/kg are now making 220-230c/kg and are rising.

Stock & Land markets analyst Peter Kostos said that while quality drafts of top-end vealers were generally scarce, he was pleasantly surprised at the Euro-cross grown heifers, 540kg, that made 218.6c/kg at Pakenham on Monday.

These cattle were purchased by Coles, while on the same day he also witnessed extra heavy bullocks, 800kg, realised 206c/kg and return more than $1600 a head.

These two sales would have struggled to fetch 165c/kg a fortnight ago, he said, which is a rise in value of between $300 and $400 per head in two weeks.

On the store market scene it is clearly obvious producers who have tasted this new-found money are hoping to keep their paddocks stocked following the autumn break.

At a 2000-head store cattle market at Bairnsdale Tuesday, Peter Kostos said some sales of East Gippsland bred weaners made 240-270c/kg, which are prices akin to three years ago.

I will get my own opportunity to gauge the rise in the store cattle prices at a special market of store market at Ballarat tomorrow, which is being conducted a week earlier than normal due to the Easter break.

To be honest, it was a tough sale at Ballarat in March, so some big numbers might be expected when it comes to quoting the rise in the market this time around.