Over-the-hook indicators realign

29 June 2017

Over-the-hook heavy yearling steer indicators in Queensland have been at a discount to NSW and Victoria since late February and have seen greater variability as a result of rainfall impacting supply.

In May, patchy rain exacerbated the lack of slaughter-suitable cattle which saw indicators in Queensland increase. This lead to heavy yearling steer indicators becoming more closely aligned across the eastern states – to be within a 16¢/kg cwt range.

For the majority of 2017, NSW yearling steers have traded at a premium to that of both Queensland and Victoria, averaging 5% and 3% higher, respectively. NSW and Victoria indicators have remained fairly stable this year, fluctuating only within a 15c/kg cwt range since the end of February to current.

Meanwhile, Queensland heavy yearling steers traded within a range of 32¢ and was at times 48¢/kg cwt cheaper than their NSW counterparts.

More recently, the string of dry weeks across most of the country contributed to a rise in cattle supplies last week. This was particularly the case in Queensland, where slaughter reached its highest level for 2017 thus far.  For the week ending the 23rd of June, 71,640 head were processed in Queensland – 3% higher than the previous week and 9% higher year-on-year. As a result, the heavy yearling steer over-the-hook indicator eased 8¢, settling on 525¢/kg cwt.

NSW heavy yearling steers consigned over-the-hook averaged 546¢, while those in Victoria returned 528¢/kg cwt.

A similar trend has occurred in the saleyards, with the Eastern Young Cattle Indicator slipping to below year-ago levels for the first time since 2014 late last week.

If the below-average winter rainfall forecast in the latest Bureau of Meteorology outlook (detailed here) eventuates, the downward pressure on prices is likely to continue.

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