Mixed views on cattle price trends

With the Australian market out of step with global beef prices and running its own race on supply, analysts have a bet each way.

Guess work: There is no strong consensus as to where cattle prices will head next. Picture: Chloe Smith

THERE are plenty of predictions out there about how cattle prices will perform now the Easter break is over.

It is just a pity none of it aligns.

From Thomas Elders Markets analyst Matt Dalgleish, who focuses on the scenario of big rain across Queensland continuing to carry the Eastern Young Cattle Indicator to even higher levels, including breaking through 900c/kg carcass weight for the first time: “It is not uncommon to see young cattle prices lift as we head towards Easter.

“However there is a tendency to see prices ease as we enter May. Given the extraordinary rain across Queensland in recent days it is quite possible that we won’t see young cattle prices softening into May as restocking takes a stronger grip on the northern markets.

“Expect the EYCI to test about 900c/kg, but without heavy cattle prices moving higher there will be limits on how far it can extend. If it was a betting man I’d put the peak this season around the 920-930 (c/kg carcass) level.’’

This differs from the scenario painted by meat trader and market analyst Simon Quilty, who bases his forecast on the five-year cattle cycle and the belief the Australian industry has transitioned from a “deep rebuild” and kill numbers will start to improve.

This was how his talk at a field day hosted by the Reiland Angus stud at Tumut in NSW just prior to Easter was summ­arised: “Cattle prices past the peak and now on downhill run.’’

Mr Quilty put some detail around his forecast, including that the average price for feeder steers weighing 380-440kg will ease to around 400c/kg liveweight by June and will close out the year down further at 350c/kg.

His long-range prediction, again based on Australia being at the bottom of its cattle cycle in 2023, was the EYCI will go to a low of 535c/kg carcass weight sometime in that year.

Moving on.

A webinar held by Elders last week to give clients some insight into livestock markets touched on industry confidence, which they described as being among the highest seen in decades as farmers bask in high commodity prices, good rain, and a back-up of stored hay and grain. Their take was there was no obvious reason markets should significantly change.

There you have it, a bit of something for everyone.

It is possible to mount a reasonable argument for each case, and as the Australian market is so out of step with world beef prices and is running its own race on supply, forecasting is notoriously difficult at present.

But it is possible to break down some of the raw data to see what is behind the most current trends.

The EYCI did reach a new record high of 896c/kg carcass weight on March 29.

The notable elements of this were:

IT WAS achieved on very small numbers, with just 5500 young cattle calculated in the EYCI on that day, which is the lowest trading pool since July 2018. Smaller numbers can cause wild price fluctuations, and in late March there was days when the EYCI went up 9c/kg and then fell 12c/kg 24 hours later, which is unusual.

NORTHERN restocking continues to influence the market. On the day the EYCI hit a record the results by state were: Queensland 946c/kg carcass, NSW 880c/kg and Victoria much lower at 820c/kg.

HIGH prices for lightweight calves are also distorting the EYCI. On the day it hit a record the range by weight was 1030c/kg for calves 200-280kg; 900c for calves 280-330kg; 836c for cattle 330-400kg; and 815c for heavier types over 400kg.

To sum up, it was really only small calves at northern saleyards that made record money on the day the EYCI hit the headlines for nudging 900c/kg carcass.

MORE

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EYCI BEEF CATTLE PRICES TO REMAIN STRONG FOR 2021, NAB FORECASTS