As cattle prices continue to creep up, the argument that El Nino panic led to a premature and overdone drought market is holding more weight and with it the case for upward movement from here.
Agents and analysts believe the turnaround in the market has come from both decent falls in many cattle regions this month and an improved outlook into the first few months of 2024.
Many analysts, including Episode 3's Matt Dalgleish who spoke at Cattle Australia's annual general meeting forum in Albury, NSW, on Friday, believe the correction overshot market dynamics.
"The fall we've seen mirrors the extremity of the falls we saw leading into the beef crash in the 1970s," he said.
"The market decline is part of a cycle, and that happens all the time, but this downturn has been a doozy.
"A lot of what we saw this year was a lack of confidence. As an industry we over-reacted to the developing El Nino and that came with short-term oversupply and at a time when multispecies abattoirs were also hit by what is happening with the live sheep trade ban."
Mr Dalgleish said a good autumn forecast now would see the cattle market back to longer-term averages.
The release of Australian Bureau of Statistics slaughter and meat production volumes for the third quarter of 2023 shows a definite shift towards a destocking phase.
However, the new data only brings the annual average female slaughter rate - the traditional measure of whether the herd is in rebuild or liquidation mode - to 46.7 per cent, which is just shy of signalling a liquidation has begun, according to Mr Dalgleish.
The ABS figures show cattle slaughter lifted 11pc from the previous quarter and 23pc from the same time last year.
Meat & Livestock Australia market information manager Stephen Bignell said that makes this quarter's cattle slaughter the highest since the start of 2020.
Slaughter lifted in every state, with the biggest increase in South Australia - 48pc from the previous quarter, he said.
The smallest increase was in Western Australia.
Mr Dalgleish said processor profits were strong at present, in stark contrast to the three years before when they were in negative margin territory continually.
He presented analysis to the Cattle Australia forum comparing processor profits to government figures on average beef farm profitability, which clearly showed when processors were making money, farmers weren't and vice versa.
He said the data highlighted the two sectors were at opposite ends of the spectrum.
"And we are in the part of the cycle where the pendulum is favouring processors. But what the data also shows is that it won't stay like this forever," Mr Dalgleish said.
Mr Bignell said that there had been some recent pockets of positive weather and a notable improvement in saleyard market conditions that weren't accounted for in the ABS data.
Weather in coming months would be crucial for determining a longer trend of destocking, he said.
"We've started to see some positive trends in the weather and a solid market response in recent weeks, and a continuation of positive rainfall will further drive that confidence," he said.
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