Northern and southern OTH indicators converge
15 September 2015
Queensland grids lifted again this week, with the grassfed over-the-hook (OTH) indicators increasing 6-18¢/kg cwt week-on-week. NSW also registered a dearer trend, up 4-12¢/kg cwt, while the OTH indicators in Victoria eased 1-6¢/kg cwt. The Queensland grain-fed OTH indicators registered a 6-23¢/kg cwt improvement week-on-week.
The strong improvement in the Queensland OTH indicators in recent weeks has closed the gap on trade and grown cattle and further extended the premium of cows over the southern southern states.
Queensland trade steers (240-260kg cwt, A-C muscle, 0-2 tooth) are currently averaging a 20¢/kg cwt and 9¢/kg cwt discount to those in Victoria and NSW, respectively. Furthermore, Queensland heavy grown steers (300-400kg cwt, A-C muscle, 0-4 tooth) are currently averaging just a 5¢/kg cwt discount to those in both Victorian and NSW. This is the narrowest spread in prices since March, before which the premium was reversed in favour of Queensland.
The over-the-hook cow market is well-and-truly dearer in Queensland, with the medium cow (260-280kg cwt, A-E muscle, 0-8 tooth) indicator averaging 492¢/kg cwt, 37¢/kg cwt and 34¢/kg cwt, respectively, above similar lines in Victoria and NSW. Furthermore, the top Queensland heavy cow indicator (300-400kg cwt, A-D muscle, 0-8 tooth) is currently 517¢/kg cwt, with some grids in the market exceeding 520¢/kg cwt. Cow prices remain strong despite potential market uncertainty after hitting the 85% US quota trigger point.
The lifts in the Queensland OTH indicators have occurred following five consecutive weeks of year-on-year declines in Queensland adult cattle slaughter. Last week, eastern states adult cattle slaughter was 156,994 head, back 8% year-on-year. In particular:
- Queensland processed 82,999 head, back 2% year-on-year
- NSW was 34,609, back 16%
- Victoria was 25,693, back 18%
- SA was 9,049 head, back 4%
- Tasmania was 4,644 head, up 12%
The MLA OTH indicators are calculated as a slaughter-weighted average of processor grids. Prices are collected from processors which represent the majority of cattle killed in each state. Prices do vary within categories and the OTH indicators do not represent discounts of cattle failing to meet processor specifications. Hence, quoted OTH prices should be viewed as indicators and individual vendor prices received may vary.
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