IT'S becoming evident the slippery slide ride that young cattle prices have been on is largely being pushed by a 'glass half empty' mentality on the part of producers.
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Dire rain forecasts and uncertainty around processor capacity are the two big concerns but high input prices, the economic downturn and even some remaining exotic disease worry is also playing into less demand around the rails, agents report.
Market fundamentals suggest prices should not fall further but that has been the case for some time now as we've watched it continue to spiral.
The majority of Australian beef's big markets are showing excellent signs. China is re-engaging, May United State's beef import prices were about 15 per cent higher than 2019 levels and South Korea continues to buy at above-average rates.
Yet most cattle price indicators are now below the five-year average.
The Eastern Young Cattle Indicator has taken the biggest hit, sitting today at 536 cents a kilogram carcase weight, having dropped another 37c in the past week. It's decline has been consistent since October last year when it was at 1086c. In it's largest dips, it lost as much as 50c in one day of trading.
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Rabobank's senior market analyst Angus Gidley-Baird said it was difficult to pinpoint the reason the market continued to drop.
"Supply is higher but not at herd liquidation levels," he said.
"We believe that processing capacity is accommodating current numbers and that global markets, while volumes are a little difficult to move, are still showing healthy prices.
"We understand that feedlotters and processors don't want to bid up prices - there's no need to with increasing supplies - but are seasonal conditions influencing producers' buying activity?"
Rain saw smaller yardings in Victoria and Queensland over the past week but in NSW and South Australia, bigger numbers continued to come forward, Meat & Livestock Australia data showed.
Brian McCormack, Nutrien South Gippsland Livestock at Leongatha, said there was big restocker reluctance on the back of finding it hard to move bullocks at the other end.
"Processors are chock-a-block - there is a six week wait on space," he said.
That story is being repeated across the country and while it hasn't lead to the heavy steer and processor cow indicator falling off a cliff - both have held firm compared to other indicators - it is signaling pain ahead, agents said.
"Full abattoirs now, and the knowledge they can't kill at capacity when even more supply comes on, is really worrying people," Mr McCormack said.
Females are still only accounting for 42pc of the slaughter, suggesting the breeding herd limit has not yet been reached.
And cattle slaughter numbers are still only just back to what would be considered normal, with an overall yearly forecast of 6.7 million head for this year being below average.
So when the herd does start to liquidate again, how the labour situation in abattoirs will play out is justifiably a big concern.
Shan Goodwin
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
