An exceptional season for much of Victoria, the Riverina, and parts of South Australia, is creating the perfect storm.
When the lightening strikes, store cattle prices could fall up to $150, compared to this week’s fat cattle prices.
Silage and hay crops are being harvested, but still there is a heap of grass. On top of this, many areas had up to, and more than, 25mm last Thursday and Friday, which will only extend the very healthy spring.
I have said many times – farmers can handle drought, and floods, but having too much grass is always a problem.
If you believe this to be an exaggeration, then consider the past week.
Physical markets were up to 10 cents per kilogram liveweight cheaper last week. Leongatha’s bullock sale, last Wednesday is a prime example, but the cheaper trend was endemic across all sales.
The point here is that bullocks dropped 10-12c, and averaged around $1800 per head, or 276c/kg lwt.
The very next day, heavy steers, up to 550kgs, sold to $1550, or 308c/kg on average. This leaves a very small margin for error.
Following on from this, markets held earlier this week were even cheaper with bullocks dropping another 10-14c/kg. How do purchases made the previous week look now?
Potentially, the very good spring conditions will continue for a few weeks yet, but we are also heading closer to Christmas, when pretty much everything stops for two weeks.
By then, paddocks will be drying out, and cattle may start to lose condition. What then, and how will recent store cattle purchases match the fat cattle market.
This large price differential is affecting not only steers, but equally heifers too.
Hardly a steer sold over 275c, and heifers mostly 250-265c/kg, where all 30-60c/kg lwt below recent store sales.
Prices in store markets are affecting physical markets in more ways than one.
Because of the price differences, many cattle, normally sold in fat sales are now being sold at store markets because of the better prices.
Now, don’t get me wrong, I think this is great for producers who sell this way, especially breeders, but eventually the gap will have to close.
I sincerely hope that fat cattle prices will rise to fill the gap, but processors continually say that meat is hard to sell.
The annual weaner sales are only weeks away. Lets hope that monsoons happen, and prices at least steady.