Cattle prices: Southeast flooding pushing grass-fed prices

The diminished flow of cattle due to flooding has resulted in saleyard prices spiking. Full numbers here.

Domestic processors have been severely affected by the wet conditions which have restricted the usual flow of grass-fed cattle which would normally appear at saleyards by this time of year.

It shows up in a breakdown of the latest data from the Eastern Young Cattle Indicator.

Processors have had to step-up and buy a larger portion of the young steers and heifers making it into the auction system, pushing price points higher.

Source: EYCI

The graph on this page tracks the performance of young cattle included in the EYCI (they have to be C-muscle so the better bred beef vealers and yearlings) which sold to slaughter. This week’s price average of 956c/kg carcass weight equivalent is the highest point since the mid-winter premiums.

Since record flooding hit Victoria early in October, the EYCI processing rate has lifted 50c/kg carcass weight.

Another marker showing the spike in processor demand is the Victorian steer vealer indicator which is currently at 619c/kg liveweight, which matches the highest rates recorded in the past 12 months according to MLA data.

The pressure on domestic meat works also shows up in another way.

Domestic processors were responsible for purchasing nearly 17 per cent of the EYCI cattle in the latest rolling data, and while still a low number, it is much higher than their usual market share of less than 10 per cent against the dominance of feedlots and restockers.

Timing is behind these market movements. At this time of year, the turn-off of grain-fed cattle is purposely slowed down as domestic processors allow for the spring flush of animals off grass, which is where they have been caught out as the extreme wet conditions delay these sales this spring.

The big wet has pushed cattle price points. Picture: Zoe Phillips

However this will change as conditions start to dry out, and already there are signs domestic demand at saleyards is starting to cool. Tradeweight steers and heifers to processors were quoted as cheaper at Wagga Wagga on Monday, with no sale at Pakenham in Gippsland due to Melbourne Cup week.

But for those who monitor the EYCI, its performance is traditionally driven by restocking demand and this has also been distorted by the extreme weather.

In the latest figures less than 30 per cent of young steers and heifers included in the EYCI sold back to the paddock, which is a very low number. Restockers are usually much more active and purchase between 40 to 55 per cent of the yearlings and vealers, and in the past when the EYCI has hit record price levels, it has been due to producer money.

So while processor demand is likely to soften in the weeks ahead, the EYCI could still track strongly if producers step back into the market as paddocks dry out and feed starts to harden. The other key component to the EYCI is feedlot demand and a mounting pressure point for this sector is feed costs with the latest move by Russia to prevent grain from being shipped out of Ukraine again likely to spike the grain market.

Meanwhile, on the export cattle front, all the discussion about future prices and market performance is around China and if its insatiable demand for beef can continue.

It comes as China continues to smash import records. In September it imported a new monthly record of nearly 290,000 tonnes of beef from key suppliers including Brazil, Argentina, Uruguay, New Zealand, and Australia according to data just published by Steiner Consulting in the United States.

In the past quarter (July, August and September) China bought 833,000 tonnes of beef, a jump of 27.5 per cent on the volumes of a year ago.

Len Steiner, Steiner Consulting, said China was now a huge component of world trade and its performance would shape the beef market heading into 2023.

“Will the pace of Chinese purchases be sustained after imports last quarter increased by a staggering 228,000 tonnes? It is the million dollar question and Chinese demand in 2023 is a key factor for prices going forward,’’ he said.