Cattle market: Surge of stock through saleyards tests price rebound

The auction system has just recorded the largest number of cattle sold in a week since 2019. Here’s how prices responded.

Some of the excitement seems to be seeping out of the cattle market as numbers pile into saleyards.

The official figure for cattle sold at the major saleyards last week was 82,587, the largest number recorded in the auction system since the drought affected year of 2019, according to data from Meat and Livestock Australia.

The cattle market has broken all the rules this year and, if nothing else, has shown the impact farmer confidence and mentality has on pricing.

Heading towards the Christmas and New Year break, and with some bursts of hot weather occurring, the current sentiment seems to be to sell and the figures suggest a backlog of cattle that were being held due to the low prices.

There were 7590 cattle yarded at Wagga Wagga in the NSW Riverina on Monday this week, including more than 1200 heavy beef cows.

In the south, the store market will be tested this week with nearly 20,000 listed for sale across several markets, led by Mortlake on Thursday with a draw of 6500 cattle. Other sales include Euroa, a special weaner sale at Naracoorte in South Australia, then Ballarat, Wodonga and Pakenham.

Prices for young store cattle are showing signs of plateauing. Picture: Nicole Cleary

Prices for young store cattle are showing signs of plateauing after some rapid rises in the past month, with steers trending at just over 330c/kg liveweight this week after peaking at 343c/kg several days ago.

Some moderation is arguably not a bad thing as it keeps store prices better connected to returns for finished feeder and slaughter cattle.

The feeder steer industry seems to be struggling to hold an average above 300c/kg, buffered by grain prices and the outlook for export beef.

The price rate for grinding beef into the United States market is one of the best indicators of the health of the cattle sector, and it has hit some headwinds this past trading quarter caused by a slowdown in consumer spending and confidence.

When converted to Australian dollars, the price for 90 chemical lean (90 per cent red meat, 10 per cent fat blend beef used to make hamburgers) has fallen below 800c/kg landed into the US – the lowest price point it has been at since August, according to data from MLA and Steiner Consulting.

While the positive of an eventual herd rebuild in the US is creating more demand for Australian beef both into the US and other markets remains correct, it could now take longer to kick-in than some analysis was predicting.

Cow slaughter remains high in the US with the herd still officially in a liquidation phase, and the latest data shows a bigger build-up of cattle in US feedlots than the industry expected.

The latest United States Department of Agriculture count had an estimated 11.95 million cattle on feed across the US in early November, not far behind the all time record for this time of year.

On top of this, there have been strong export sales of beef into the US this year, lead by Australia which has shipped in more than 200,000 tonnes compared to just 117,000 tonnes in the same 11-month period in 2022.

Another looming pressure point for the US manufacturing beef market will be the release of South American product which has been held in bonded warehouses waiting for the calendar to kick over into 2024 so it can be cleared under lower tariffs.

The latest predictions coming out of the US now seem to be centred on mid next year for the market to start to show the benefits of a slow down in production and herd rebuild.

In the meantime, Australia has to get through its hottest summer weather and onto the autumn break, which could be crucial for determining how producer confidence unfolds for next season.