Heat impacts cattle market
31 January 2019
Persistent hot, dry weather has taken a toll on cattle prices in 2019, with the EYCI recently falling to 468¢/kg cwt, 11% lower than where it finished 2018.
During October and November, widespread showers across eastern Australia boosted moisture levels and buoyed markets. Since then, storms have become far more sporadic in most areas apart from the far northern tropics. Much of the pasture that began to develop during spring has now died off following a series of severe heat waves.
While this type of weather during December and January is not entirely unfamiliar to many producers, the challenging conditions follow an extremely dry 2018. Unfortunately, the Bureau of Meteorology’s latest three-month weather outlook points to little reprieve from the recent high temperatures and lower-than-average rainfall.
For the first four weeks of 2019 (up to 25 January), eastern states saleyard throughput exceeded 140,000 head, an increase of 7% on the same period in 2018.
The largest increase came in Victoria, where yardings increased 29% to 32,000 head. In Queensland, yardings rose 15% to 45,000 head, with almost 10,000 head penned at the first Roma Store Sale for 2019. In NSW, numbers fell 6% year-on-year to 65,000 head.
Raised slaughter levels during January indicate the continuation of a herd contractionary phase that began roughly 12 months ago.
For the first four weeks of January 2019, eastern states slaughter rose 11% year-on-year to total almost 400,000 head. Numbers rose 7% in NSW to 118,000 head, Queensland rose 12% to 186,000 head, while Victorian slaughter rose 15% to 96,000 head.
Heightened supply combined with poor weather conditions have led to falling prices across most categories.
As expected, the market for younger and lighter weight cattle has come under pressure due to subdued restocker demand. For the month to 29 January, the EYCI averaged 484¢/kg cwt, down 12% on January 2018 and 4% lower than the five-year January average.
Heavier steer categories have also seen falls during January, which is a little more surprising given the difficulty in attaining weight gains. The eastern states medium steer indicator averaged 249¢/kg live weight (lwt) on 29 January, which was 2% below where it finished 2018 and 9% below 20 November. Heavy steers averaged 257¢/kg lwt on 29 January, falling 5% from the closing price of 2018 and down 15% on 20 November.
The eastern states medium cow indicator averaged 188¢/kg lwt on 29 January, up 2% on the closing price of 2018. Feeder cattle, which were generally well supported relative to the wider young cattle market in 2018, have also come under pressure. The feeder steer indicator averaged 262¢/kg lwt on 29 January, down 10% on the last price in 2018.
The poor growing conditions have had an adverse effect on the anticipated sorghum harvest, raising concerns for anyone feeding livestock.
Since the end of December 2018, sorghum delivered Darling Downs has risen 5% to $363/tonne on 25 January, while wheat remains above the $450/tonne mark (Profarmer).
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