Two reports out recently provide “before and after” snapshots of the cattle market.
While domestic cattle prices have come “off the boil”, they are expected to still “simmer nicely” during 2018, with producers forecast to enjoy a profitable year ahead, according to a new industry report.
In its Australian 2018 Beef Cattle Seasonal Outlook, agribusiness banking specialist Rabobank said a combination of increased supply, reduced producer demand and weaker global prices will see domestic cattle prices ease from the highs of 2017 to stabilise at just above five-year averages.
Cattle slaughter numbers are expected to rise marginally and overall Australian beef production to increase by three per cent for the year.
Report author Rabobank senior animal proteins analyst Angus Gidley-Baird said while the decline in prices would more than offset the small rise in production – meaning producers’ incomes would generally be lower in 2018 – the outlook was still for an overall profitable 2018 for Australia’s beef producers.
Four watch factors could however alter the “shape of the year”, and impact upon the fortunes of Australia’s beef sector, both for better and for worse, the report cautioned.
These were: the possibility of a big, early Queensland wet season, fierce competition in Asian export markets, rapid growth in Chinese demand for live exports and increased US cow slaughter.
Despite isolated relief, the Bureau of Meteorology has reported above average dry conditions for the first three months of trading in cattle markets, with the south-east corner of the country having had a very dry start to 2018.
Almost all of NSW, Victoria, eastern SA and parts of southern and central Queensland have experienced below average rainfall for the January–March period, with many producers relying on supplementary feed to maintain quality after the effects of the dry summer.
Meat & Livestock Australia said in its first quarter review of trading that national cattle yardings at its reported saleyards were 19pc higher year-on-year, at close to 682,000 head.
NSW and Queensland drove the overall increase, with numbers up 31pc and 33pc, respectively.
Throughput in Victoria and WA declined 4pc year-on-year in both states, while SA and Tasmania were 18pc and 47pc lower, respectively.
The number of adult cattle processed in the eastern states for the January–March period, also as reported by MLA, was 4pc higher than the same time last year, but down 9pc from 2016 levels.
In NSW, the adult cattle kill for the March quarter was up 7pc on year-ago levels, while Queensland slaughter lifted 2pc.
The number processed in Victoria increased 20pc year-on-year, while SA levels were down 32pc (due to the Thomas Foods, Murray Bridge abattoir blaze).
On prices MLA reports the Eastern Young Cattle Indicator (EYCI) averaged 544c/kg carcase weight (cwt) in the March quarter – down 14pc year-on-year, although well-above (19pc) the five-year average for the period.
In NSW, the restocker steer (200–280kg) saleyard indicator was 16pc lower year-on-year, at 301c/kg live weight, while in Victoria, trade steers were back 16pc, at 279c/kg and heavy steers fell 15pc, to average 260c/kg.
Restocker steers in Qld saleyards averaged 10pc lower.