Eyes to the skies

Eyes to the skies


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Beef producers and cattle prices have been suffering under a dry April and May, with conditions influencing the nearly 15 per cent fall in the Eastern Young Cattle Indicator since the start of 2018.

TDC agent Matt Treglown, Penola, at Ballarat store sale. Photo by Murray Arnel.

TDC agent Matt Treglown, Penola, at Ballarat store sale. Photo by Murray Arnel.

The drier than average first quarter for the southeastern states, and delayed autumn break in Victoria, pushed the EYCI under the 70 per cent range last month.

While the ten-year seasonal average pattern shows it is not uncommon to see the EYCI gain 5-7pc from May through to September, this typical annual lift can be undone by climatic factors such as a lack of rain.

The EYCI price slide has eased in the last fortnight with signs of an Autumn break providing a floor in cattle prices, which have gained 1.3 per cent to sit just below 490.5 cents a kilogram carcase weight.

Victoria's recent rainfall did not extend further north into NSW, so it is difficult to see a decent mid-Autumn rally in cattle prices beginning while it remains so dry in much of the country.

Across the national saleyards, most categories of cattle have gained value with the National Trade Steer indicator increasing 3pc to 284c/kg live weight, outclassed by medium cows that managed a 5pc rally on the week to 357c/kg live weight.

The green pasture tinge in parts of Victoria inspired the 20pc week-on-week reduction in east coast cattle yardings. The National Livestock Reporting Services quoted east coast cattle yarding at 54,360, which now sit comfortably within the normal seasonal range and is only 3.6pc above the five-year seasonal average.

However, with the north yet to benefit from the recent rains in any meaningful manner, cattle prices will struggle to gain significant traction while dry conditions elevate NSW cattle yardings. NSW’s cattle yarding is 40pc higher than the five-year seasonal average and 37pc above the level set this time last season.

The three-month forecast for Victoria – which could see a price lift and reduced slaughter/yardings – hinges on NSW seasonal conditions. The Bureau of Meteorology (BOM) rainfall forecast for the next three months signals a return to relatively normal conditions for much of the nation as we head toward winter.

While Western Victoria is expected to be in for a dry Autumn and Winter, the rainfall models for much of the country suggests conditions are most likely to be reasonably standard.

The more promising BOM forecast should see the EYCI stabilize toward 520-530c/kg, although persistent dry in the north could see this fall to 470c as a best-case scenario and as low as 420c in the event of a severe dry spell.

Despite the improving beef export prices offshore, which have seen burger mince exports to the USA gain 5pc last month, further price consolidation is anticipated until NSW experiences a decent break. 

Another theme to watch is the long range forecast for Spring - ideally, we do not want another drier than normal season like last year. 

The dry start to Spring in 2017 saw young cattle prices ease 7pc through September, which sapped the optimism out of restockers with many producers realising the average spring pasture growth that sustains their cattle trading model into early summer was going to be hampered by the drier than normal conditions.

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