Rain replenishes the cattle market
07 March 2018
Following on from last week’s article, heavy rain has continued to fall across many key supply regions of Queensland, lifting producers’ spirits and the cattle market alike. After gaining 13.25¢ during last week, the Eastern Young Cattle Indicator (EYCI) opened strongly on Monday this week at 543.25¢/kg carcase weight (cwt), before jumping 14.50¢ on Tuesday to 557.75¢/kg cwt.
The weather system was particularly welcomed by areas in central and western Queensland, some of which have been in the grips of drought for years and received long-awaited downpours over the last week.
Despite many of these areas having already been heavily destocked, the prospect of increased feed will impact the supply of available cattle across the state, as the improved conditions will encourage producers to hold on to what stock they have for breeding or growing out to heavier weights. Last week’s cattle slaughter in Queensland was 3% lower than the previous week, and 6% lower than the same time last year. On the other side of the equation, demand for cattle is likely to ramp up, with the rain sparking restocker enthusiasm.
These effects are already being felt at the major selling centres in south-east Queensland, and into NSW. A surge in prices for restocker cattle at Roma Store on Tuesday is a strong indication of the store market response to the wet weather. After two consecutive weeks of large yardings, the total number penned declined 40% week-on-week, to just over 4,500 head. There was strong support for young cattle, with EYCI eligible cattle at Roma selling 67¢ dearer week-on-week and 23¢ dearer than last year, at an average of 610¢/kg cwt.
Interestingly, so far this year, the EYCI is following a fairly similar trend to 2017. The early-autumn uplift in the EYCI in 2017 was also due to a significant weather event – Cyclone Debbie – and the very wet weather across the east coast that ensued. The rise in prices then was caused by considerable disruptions to cattle supplies, as well as the reinvigorated restocker interest for young cattle. However, a dry winter prevailed, which saw cattle slaughter levels remain elevated and prices steadily decline.
The March–May Bureau of Meteorology (BOM) rainfall outlook for 2018 is not an overly positive one for central Australia in particular, and there is a roughly equal chance for a wetter or drier outlook period for much of eastern Australia and south-west WA. However, this recent widespread rain event will go a long way to correcting the rainfall deficit in parts of western Queensland, and the early autumn break will provide a good opportunity for pasture to establish before the winter months.
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