A cow selling pattern has emerged. This is what it looks like

With dry conditions across April and no significant rain on the horizon, cattle supplies have again ramped up and pressured the auction system. Markets experts Jenny Kelly takes a look.

Price movements of 20-40c/kg have been evident for cows every month this year.

Weather and cattle supply have been the two key factors behind the price roller coaster for beef this year, and it has hit the market again.

With dry conditions across the pivotal month of April and no significant rain on the horizon, cattle supplies have again ramped up and pressured the auction system into another spate of 20-40c/kg price falls in a repeat of the cycle which has been happening for months.

While it sometimes appears there is no rhyme or reason to the cattle market, there does seem to be a bit of a pattern happening behind the price performance of the saleyard cow indicator.

Rapid price movements of 20-40c/kg have been evident for cows every month this year, and it seems to be connected to when there is a bounce above 60,000 head in the national female slaughter.

The graphic on this page illustrates the female cattle kill versus the average saleyard price for cows in the same week.

In January there was an impressive price rally for cows with the average saleyard price for processing cows rising to a peak of 260c/kg liveweight by the first week of February. Female numbers were low during this period following heavy summer rains

Then just little more than two weeks after hitting 260c/kg cow prices shed nearly 30c/kg after supplies ramped up. The average price went as low as 206c/kg during March after the female kill hit more than 65,000 in a week.

The cycle then changed again after producers pulled cow numbers back and prices bounced back up to 233c/kg in early April after the national female kill dropped back below 50,000. But in a repeat of what has been happening, saleyard prices have dropped 30c/kg again after the female slaughter lifted above 62,000 (see graphic).

On Monday this week the saleyard indicator for cows went below the 200c/kg threshold to the lowest price point recorded this year. So if the trend holds true the market should show a price rally in coming weeks as producers hold back stock and supply tightens and puts demand pressure back into the market.

There is already signs of this happening, with cattle numbers at the weekly prime market at Wodonga on Tuesday halved from the original draw as vendors reacted to the 20-40c/kg cheaper price trend recorded at Wagga Wagga in NSW on Monday.

But the caveat to it all is the season, and if the dry weather continues deep into May the ability of producers to hold onto high maintenance breeding cows will be tested by a lack of paddock feed and the onset of winter.

Livestock agent Craig Schubert, of Schubert Boers at Wodonga, said the market had been in a “vicious cycle” of ups and downs which the dry weather could now feed into.

“The way the cow market has come back producers won’t take the price unless they really have to, so weather is going to be a significant factor as the fundamentals of the export market still look good,” he said.

Craig Schubert

Export rates for cow beef to the United States are still high, although the US beef market has shown signs of plateauing after industry data suggested robust numbers of cattle on feed in the US at higher weights.

The number of cattle on feed in the US was estimated at 11.821 million as of April 1, slightly lower than last month but 1.5 per cent higher than the same time last year, Steiner Consulting reported. But within this figure was data that said the pool of cattle which had been on feed for more than 150 days was 20 per cent higher than a year ago, while those on feed for more than 120 days was 11 per cent higher. As a result carcass weights have increased in the US and this has helped boost overall beef supply.

Steiner estimated that US beef production had been around 65 million pounds in the past three weeks, 5 per cent higher than last April. As a result some of the momentum in the US market has been lost and there was a slight price correction for imported grinding beef in the past week, the first time the market has shown a decline since December.