Weekly sheep and cattle market wrap
24 June 2022
- Young cattle prices ease across the country as buyer selectivity and increased supply place downward pressure on prices.
- Lamb prices remain below year-ago levels, influenced by quality and volume.
- Lamb and mutton slaughter outperform year ago levels despite the shortened selling week, showing the strength of supply in the current market.
Cattle market softens
Australia’s benchmark cattle indicator, the Eastern Young Cattle Indicator (EYCI), is currently operating at 1,052¢/kg cwt – its lowest price since 18 October 2021. Since 10 June, the EYCI has fallen 6% or 68¢/kg cwt, while supply has lifted by 30% or 3,184 head.
Several factors are currently influencing the sharp decline in the indicator’s performance in the past two weeks, including:
- a large uptick in supply
- wet and wintry conditions affecting pastures and finish of stock presented for market
- quality disparity across yardings
- processors operating at saleyards
The finish of cattle presented at saleyards has been affected by the onset of cool and wet conditions across most supply regions, while the large disparity between quality types and plainer types is influencing price. As most regions receive above average rainfall, high moisture content pastures and grass are influencing livestock weight gain performance and finish.
As buyers become more selective in their purchases, the quality of the article buyers are looking for significantly influences their propensity to pay. With plainer types of cattle being yarded, this has influenced buyers’ attitude towards demand, with buyers now focusing on purchasing quality animals as rebuilds continue. With reports that processors are not operating at some saleyards, reduced buyer demand is also softening cattle prices due to less competition.
With the restocker premium to the feeder price in the EYCI falling to 81¢, this tightening demonstrates a reduced overall demand for restocker cattle and acts as a lead indicator for market performance. Analysis of this dynamic can be found here.
In the west, the Western Young Cattle Indicator (WYCI) is experiencing market withdrawals similar to those seen in the eastern states. Overnight, the WYCI fell by 96¢ to 1,026¢/kg cwt following the inclusion of the Mount Barker sale, with Mount Barker’s average WYCI price falling by 117¢/kg cwt week-on-week.
Current throughput of the WYCI is operating at 200 head, a decline of 24% week-on-week. With low throughput, the performance of this indicator can become volatile.
Lamb prices soften on year-ago levels
The National Restocker Lamb Indicator is currently sitting at 708¢, 132¢/kg cwt or 15.7% lower than year-ago levels. This price performance demonstrates the how flock growth has developed as on-farm numbers continue to build, slowing producer demand to purchase restocker lambs as they have higher numbers on-farm to select from.
Although softer than year ago levels, heavy lambs are the best performing sheep indicator at present, lower by 34¢ or 4.2% at 774¢/kg cwt. The robust export demand for Australian lamb supports this price performance as increased supply places downward pressure on prices.
The mutton market has eased in recent weeks, currently operating at 589¢. This is a 62¢ drop from its year high of 651¢/kg cwt recorded on 8 June.
Processing sector shows resilience
Last week, due to the Queen’s Birthday public holiday, a shorter processing week occurred for many states. Considering this, slaughter numbers across all species remained resilient, showing the processing sector’s capacity to operate on reduced working days.
National cattle slaughter volumes only fell by 5,630 head week-on-week to sit at 91,471 head, even with only four working days.
Meanwhile, lamb slaughter was firm on year ago levels at 354,425 head, showing robust availability of supply due to the larger lamb cohort and national flock growth.
Sheep slaughter outperformed 2021 levels by 9%, with 80,151 head processed last week.
To view the National Slaughter report, click here.