Restockers outstrip feeders

30 May 2017

Low cattle availability and showers across parts of NSW and Victoria over the past week were enough to sustain the considerable premium paid for yearling steers by restockers over their feedlot counterparts.

At the close of Monday’s markets, the national restocker yearling steer indicator was 35¢/kg lwt (10%) above feeders, at 378¢/kg lwt.

Illustrating the strength of the market for the year-to-date, yearling steers going back to the paddock have averaged a 30¢ (9%) premium over similar cattle destined for lot feeding – all due to the same reasons – some rainfall and a small pool of cattle.

This is a continuation of strong restocking demand in 2016, particularly the second half of the year, when the indicator averaged 26¢/kg lwt (8%) above feeders. But before that, in 2015, cattle back to the paddock only averaged 4¢ (1%) higher than feeders, and in 2014, they were actually at a small discount (-0.14%).

Interestingly, the 2014 and 2015 relationship is more reflective of how closely aligned the two indicators historically track each other, and provide somewhat of an insight behind how sustainable the current premium is.

That is, while scattered showers continue to ignite demand, and while cattle availability holds tight, the premium paid will maintain. However, once the inverse of each factor starts building, it’s likely the significant premium paid by restockers will erode – potentially to nothing.

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