Steer price unlikely to bounce any time soon, as dry times loom

Gippsland yards have experienced an influx of cattle from the east of the state, while feedlots were largely absent from last week's store pens.

While some areas, notably the north-east and south Gippsland, are still experiencing good seasonal conditions, the dry times in the east are pushing more cattle into centres like Leongatha.

But while Nutrien Wangaratta auctioneer Daniel Fischer described heifer prices as "awful" he said they also presented an opportunity to get rid of older females and buy new stock.

"People should be taking the opportunity to grab them, when they can," Mr Fischer said.

He said talk of an El Nino was driving confidence down.

"I keep saying they are awful because we have a media fraternity that keeps saying El Nino every minute - for the last six months, all we have got is that we are going into El Nino.

"I am not saying we are not going into an El Nino.

"But around here we are faced with one of the best seasons we have probably ever had and our farmers are too scared to take advantage of it, because of the continual saturation coverage that there is a drought on the way.

"If you cry dry spell, long enough, you will get it right sooner or later."

He said it appeared restockers were also waiting for the bottom of the market, trying to pick the bottom of the market," he said.

"It's unlike last year, when people just jumped over the fence because they had grass," he said

"They wanted to put anything in the paddock and didn't care - they were happy to buy it at their back door because they weren't buying it anywhere cheaper elsewhere.

"The problem with it now is people are faced with a situation every time they go to buy cattle they look and say, are they going to be cheaper in a fortnight.

"They are taking the attitude if they don't get them today, they will probably be cheaper next week or the week after, so they will sit and wait - that's creating a real hole in the market."

Cattle with weight were finding a home, but lighter ones were "losing a bit of traction in the market."

Meat & Livestock Australia Senior Market Information analyst, Ripley Atkinson agreed that confidence was having an impact on market performance.

"While Australia is not in drought, the market is performing as though we are in drought," Mr Atkinson said.

"The lack of confidence in buyers translates to a lack of demand, is having a direct effect on price."

On the flip side the continued high supply meant - "buyers have the luxury of choice - they can be more selective on what they buy."

He said in Victoria water storages were full, soil moisture profiles were "not too bad" and large parts of the state had had an "exceptional" season.

"I am sure there are plenty of places that are looking for rain, but generally its quite good," he said.

Rain, or lack of it, was the biggest driver of confidence, he said.

"Seasonality accounts for 90 per cent of buying decisions and confidence in producers - rain will turn the market around," Mr Atkinson said

"We've even seen the market move a little bit when there is rain in certain supply areas."

Elders Euroa auctioneer Joe Allen said there were a lot of store cattle in the system being offered for sale.

"It's pretty obvious, at the minute, there are a lot of store cattle in the system being offered, because at the moment other areas are historically pretty dry for this time of year," Mr Allen said.

While there was a good season in north-east and central Victoria, Euroa did not have large yardings in September and October.

The selling centre was competing against big numbers of cattle coming out of east Gippsland and NSW, where the season was starting to turn.

Feedlots and abattoirs were well booked out in advance, with cattle coming out of drier areas, he said.

"In the next few months, we will see a few more people sell prime cattle and be back in the market to replace them with stores," he said.

"The prime cattle flush hasn't quite come yet, but it will - there will be a lot of people ready to do the full circle, and be ready to trade in."

SEJ Korumburra livestock agent James Kyle said it was shaping up to be a really good spring, in the area.

"I tipped my rain gauge out on Thursday night and then I checked it Sunday morning and we have had 42 millimetres of rain - that's the Korumburra-Leongatha area - which is a bloody good drink or rain," Mr Kyle said.

Warmth and sunshine this week would kick grass growth along - "but I dunno whether it's going to kick the cattle prices much," he said.

"Our numbers are going to keep coming from out of the area, but there is only really so much the south Gippsland bullock fatteners can soak up, as well," he said.

"Obviously feedlot demand is the backbone, but even they are a bit hit and miss, some weeks.

"I think everyone has got plenty of numbers around them, in both the feedlots and for the killing space, as well."

Episode 3 director Matt Dalgleish said "restocking intent" appeared to have gone out of the market.

"If you look at the export side of things, Japan is a little bit weaker, but all the other centres, like the US, have rebounded significantly this year, in demand for Australian products," Mr Dalgleish said.

"They have gone from being the fourth highest destination to number one in August, so there is a really big return in demand for Australian beef.

"South Korea has been pretty strong, right the way through, and China has been above average as well."

He said pricing was very competitive when compared to US benchmarks - "we have kind of got drought discounts, for our heavy steers, when we are not in drought.

"You would expect prices to be a little bit higher, given the demand's there, but it's just confidence that is lacking," he said.

"It feels like producers have started to prepare for drought, even though it hasn't come."

The female slaughter ration gave some clues, ticking up 47 per cent in the June quarter, "which kind of indicates we could be in liquidation for that quarter, if we have, we have only just gone into it now.

"Buyers don't have the confidence to stay heavily stocked, if they are expecting the Bureau of Meteorology telling them there is going to be couple of years or pretty poor rainfall."

Mr Dalgleish said the last quarter saw the second highest number of cattle on feed, at 1.25 million head, with utilisation at 81 per cent.