EYCI rebounds to 496.75c with smaller yardings and a sniff of rain

The EYCI hit 496.75 by Tuesday evening, a welcome one-day jump of 14c and a 36.75c recovery in the past week.

Yarding numbers have generally been reduced across eastern Australia by last week's holidays while a sniff of rain in many areas later this week may also be helping cut the flow of stock onto the market.

Widespread rain would almost certainly trigger a scramble for cattle with the national beef herd slipping to its lowest level this century.

New Meat and Livestock Australia forecasts are tipping cattle numbers will drop to 25.2 million by June, a 7.7pc slide caused by ongoing drought and devastating floods in north west Queensland where an estimated 500,000 to 700,000 cattle perished.

And Rabobank, in its latest beef cattle seasonal outlook, said cattle prices could jump by as much as 20pc with a return to good seasonal conditions.

Rabobank senior animal protein analyst, Angus Gidley-Baird, said any meaninful rain, particularly in NSW and Queensland, could see restockers, feedlots and processors battling for limited numbers.

The flip side with continuing dry weather would see prices ease and remain below 2018 levels with Rabobank modelling predicting an EYCI of between $4 and $4.50 a kg throughout 2019.

Australia's key export markets were expected to remain strong, Mr Gidley-Baird said, with trade flows increasingly focused on Asia.

"The growing demand for protein in China, extenuated by the shortage in pork production due to African Swine Fever, has seen China increase its import share in global beef markets," he said.

Meanwhile, the latest industry projections from MLA have underlined the potential for an outbreak of cattle buying fever in the event of major drought-breaking rains.

The drought-induced slaughter of female cattle has been historically high for months which will reduce numbers of restocker cattle down the track.

MLA's market intelligence manager, Scott Tolmie, said forecast adult slaughter for 2019 had been revised slightly higher but was still expected to be below 2018 levels at 7.7 million head.

"For the year-to-February, adult cattle slaughter was 1.28 million head, 11pc higher than the same period in 2018 and the highest opening kill since 2015," he said.

"With a reduced pool of available slaughter cattle, any widespread autumn and winter falls will be pivotal to how slaughter tracks in the second half of the year."

Mr Tolmie said the female portion of total adult cattle slaughter had remained elevated this year, reaching 54pc in February, its highest monthly level since June 2003.

"On a 12-month rolling basis, the percentage of females in adult slaughter stands at 52pc - well above the 47pc mark typically indicating a herd in contraction," Mr Tolmie said.

"Beef exports for 2019 have been revised marginally higher since the January projections, to 1.09 million tonnes - a three per cent contraction year-on-year but still above any level recorded prior to 2013.

"Global demand for Australian beef has been strong, supported by a low Australian dollar and fresh tariff reductions in the new year.

"In the first quarter, Australia exported almost 265,000 tonnes of beef, up 11pc year-on-year and underpinned by increased grassfed beef production.

"Export growth has been led by China and the United States, with first quarter shipments up 67pc and 16pc year-on-year, respectively."

"Prices for store condition cattle are expected to remain under pressure until seasonal conditions allow restockers to re-enter the market with confidence and producers to hold onto more cattle," Mr Tolmie said.

"The longer the herd remains in liquidation, the sharper the expected price correction when it re-enters rebuild territory."