Restocking keeps hope high as 2020 draws to a close
The year seems to end with a lot of uncertainty, but there are encouraging signs with support from northern restocker demand.
RAIN in the north could keep Australia’s expensive cattle price bubble alive as 2020 winds to an end in the same fashion as it started — with a lot of uncertainty.
In a week of little market action heading into Christmas, there was some subtle but encouraging signs store cattle values could be supported by the re-emergence of northern restocking demand adding depth to local support.
The graph shows how young cattle prices have ticked up in the north, going against the downward trend that emerged in Victoria earlier this month.
According to saleyard figures generated by the National Livestock Reporting Service, Queensland is now leading price trends for all the major classes of young cattle — and by a long way in some cases.
The latest price listing for lightweight store stores being sold in Queensland (which is always the highest priced category on a cents per kilogram basis) was 522c/kg, compared to 370c/kg in Victoria.
It is a big discrepancy, which partly reflects the lack of lightweight and decent bred young steers sold through prime markets in the south – the better quality weaners going through feature store markets in Victoria.
But the trend to dearer young cattle prices in the north is still evident when feeder steer prices are analysed.
As the graph shows, prices for feeder steers (330-400kg) in Queensland have lifted by 12c in the past week to close at an average of 426c/kg.
In Victoria they have weakened to end at 370c/kg heading into Christmas.
A higher price point for young cattle in the north is a positive for the upcoming New Year sales, as it plays into the financial decisions facing farmers in Queensland and NSW of trying to buy cattle closer to home or factoring in freight costs from southern markets.
Further evidence of a step-up in competition from the north can be seen in the latest AuctionPlus results.
The three top ranked buying areas for cattle last week were Southern Queensland, followed by Central Western NSW and the North-West Slopes of NSW.
There were some price improvements recorded for cattle on AuctionsPlus last week, particularly in the female breeding categories where cows and calves averaged $2820 (up $328 dollars per unit) while pregnancy tested in calf heifers averaged $1960 (up $174). On paper they mark significant price gains, although a few high sales can swing the average result higher on any given week.
On a more sobering note, a return of hard border closures as different states move to protect themselves against the latest COVID-19 outbreak near Sydney looms as another pressure point for the southern New Year calf sales.
While travel restrictions are not as harsh as earlier in the year, constantly changing rules and time delays of crossing borders could deter some potential buyers.
There is, however, the safety net of most of the major sales being interfaced with online bidding. But the sheer number of sales being packed into a short period of time has been exaggerated this New Year by date changes and extra sales.
At the latest count there are 23 major weaner sales scheduled for the first week of January, stretching from South Australia through to Wodonga on the border.
If history is any indication, there is usually at least one of these sales where the market falls shy of expectations as the major buyers pick and choose locations.
Current store price trends for cattle still appear buoyant when viewed against the ongoing data coming out from competitor beef nations, and the uncertainty of the world economy as coronavirus continues to cut a swatch through major economies such as the US and Europe.
And on top of this is the fraught nature of Australia’s trading relationship with powerhouse China.
Throughout this year the discrepancy between Australian cattle prices and global trends has been noted by analysts, and this situation hasn’t changed.
Australia continues to lead the pack.
But looking back over the past 12 months, the cattle market has been the most resilient of all the livestock industries, rarely deviating from an upward price trend.
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