Clearances dive as restocker interest dries up

A year ago, it was difficult to buy stock at high prices. Now, even a significant drop in rates isn’t tempting producers to buy.

A lack of buyer confidence eroded by talk of El Nino and diving livestock prices has put the brakes on restocker demand in online sales across eastern Australia.

Twelve months ago, online sales on AuctionsPlus recorded an 84 per cent clearance for all cattle offered, but this had slipped to just 34 per cent last week.

It was a slightly better scenario for sheep, where 58 per cent of all lots offered sold last week compared to 74 per cent for the same week a year earlier, but some lines are still not attracting a single bid.

Restocker interest is drying up as buyer confidence is eroded.

AuctionsPlus data and market analyst Damien Thomson​​​​ said restocker demand was subdued due to a lack of buyer confidence.

He said a turn to drier seasonal conditions and high herd and flock numbers had also contributed to the lack of confidence.

Mr Thomson said a number of stock listed on the online platform were receiving no bids at all, but producers were still keenly watching what was happening when sales were held each week.

“No bids are the results of vendor and buyer expectations being different,” Mr Thomson said.

“The number of logged-on buyers and catalogue views are unchanged from previous years.

“Setting reserves that reflect market values is an important element of securing a sale.”

Mr Thomson said supply and demand forces currently influencing the market were likely to continue through spring.

“Despite promising signs in export markets, particularly to the United States, drier seasonal conditions, increased supply of slaughter cattle and backed-up supply chains are likely to keep prices and clearance rates low,” he said.

Meanwhile tough trading conditions in prime markets are giving restockers little incentive to restock.

The benchmark Eastern Young Cattle Indicator closed on Monday at 465c/kg, losing 27c/kg in the past week and 94c/kg in the past month to sit 555c/kg lower than it did a year ago.

There is little joy in lamb markets, too, with the national trade lamb indicator dropping to 426c/kg and the heavy lamb indicator down to 450c/kg.

Lamb prices are nowhere near where they were a year ago but are faring better than mutton, which has dived below 200c/kg carcass weight.

But the big loser has been mutton, with the national indicator slumping to just 169c/kg carcass weight in early sales this week, compared to 510c/kg a year ago, or 67 per cent lower.

This is expected to feed into what producers are prepared to pay for replacement ewes at upcoming feature sales.

Meat and Livestock Australia global supply analyst Tim Jackson said sheep and lamb yardings reached their highest numbers since May.

He said sheep slaughter rose in all states last week to 147,035, 12,408 higher than the previous week while the national lamb slaughter was also up by 11,456 to 448,187.

And the drop in prices, while not stemming yardings, was affecting confidence.

“Restocker sentiment continues to soften relative to overall prices,” Mr Jackson said.