Most of the eastern seaboard are desperately waiting for rain for several different reasons.
Croppers want rain to retrieve something of their crops sown, livestock producers want grass, and most need water too.
Much of the conversations of late have been around where livestock prices will sit given a general rain.
Looking toward the north may give some indication to where prices may head over the next 12 months.
Rain was forecast for some of the drought-stricken areas of New South Wales and Queensland two weeks ago, and supply dropped away on the strength of that.
Then it did rain and supply dropped further.
This saw prices leap ahead, at least for cattle to turn off, which was for many of the cattle penned. Prices did increase for fat cattle, but to a lesser degree.
Given the number of young cattle involved, which fall into the criteria for the calculation of the Eastern Young Cattle Indicator (EYCI), a sharp increase of over 20 cents a kilogram carcase weight occurred.
For producers looking to sell stock, it was a great opportunity, and this has seen supply leap with many markets offering numbers similar to a pre-rain period, three weeks ago.
Confidence is a great thing, and it was responsible for the big turn around in prices, and then supply.
Given that young cattle are the larger part of any northern market, except for cows, it was interesting to see the number of cattle purchased to turn back out.
But any conversation around future supply has been driven by the number of cattle being sold.
When you study all of the markets from Wodonga to northern Queensland, most, if not all of the younger cattle have been purchased by feedlots or restockers.
There remains plenty of cattle either in feedlots, or back in paddocks, so the outcome of supply then depends totally on rain.
If it doesn’t rain, most of these cattle will return for sale, potentially at cheaper rates.
So, will this see the EYCI be a good indicator of fat cattle? And will it be positive for the industry? Possibly not.
At a Merino ram sale at Bairnsdale, the topic was how bad the season is.
Not only said how bad it is, but how bad it is given the time of year.
Akin to the north, producers are desperate for a spring rain.
Some producers are buying water, some have agisted stock, some have off loaded stock. Some have also said, if the dry continues, further reduction in stock will happen, and very soon.
Meat & Livestock Australia market analysts did predict the EYCI would fall to 455c/kg this year, but I don’t believe it was expected that poor quality would drive this end result.
As mentioned last week, the current selling of plainer condition young cattle is creating the EYCI price. The analysis of market reports this week proves that.
One producer mentioned last week that this is the first time he could remember, that prices for finished cattle, and heavier steers and heifers were higher than replacement prices.
For beef farmers at least, there is a great opportunity to purchase well bred, young steers or heifers at lower rates.
They don’t have to fatten them, just grow them out for future store markets.
