Latest MLA data shows store cattle sales thriving while processors struggle

The latest MLA data suggests that even though processors are currently struggling, there’s confidence in a resurgence. See why.

The cattle processing sector is being heavily affected by low throughput of cattle, but down the chain, prices paid for feedlot or restocker cattle remains strong, with buyers apparently confident the disruptions will settle.

The cattle market indicators are telling two different stories with the processing sector-based indicator falling on finished cattle.

However, the Eastern Young Cattle Indicator remains firm on its previous highs thanks to booming restocker and feedlot demand.

Meat and Livestock Australia analyst Stephen Bignell said the indicators that relied heavily on processing numbers were the ones that were impacted the most, due to supply chain issues surrounding staffing amid rising Covid cases.

Feedlot and restocker dependent indicators, like the EYCI, have remained strong thanks to market confidence but other indicators show processors struggling. Picture: Yuri Kouzmin

“The EYCI indicator is driven by feedlotters and restockers and there’s obviously still a lot of confidence in the market,” Mr Bignell said.

“The question is if that price fall and uncertainty around the processors will flow through to the EYCI or if it is just short term and the EYCI will remain high,” he said.

The medium cow indicator saw the biggest drop, down 27 cents – almost 10 per cent – from levels in mid-December to where it now sits at 348c/kg.

Mr Bignell said with processors buying up to 80 per cent of the cattle that make up the medium cow indicator was heavily impacted but only five per cent of the EYCI cattle are bought by processors so the indicator remains high.

“We’ve had a wet December so that’s kept the ECYI high as well as the feeder steer indicator which is dominated by feedlots.”

However, Mr Bignell cautioned that it was difficult to predict trends in the new year with cattle throughput in the markets at very low numbers.

“It’s hard to pull any trends just because we have such a low volume of cattle going through the market at the moment,” he said.

“Cattle slaughter numbers for week two of this year was 41,678 and in 2020 that was 119,000. That’s 80,000 less cattle so it is having a major effect on the throughput.”

The EYCI figures are coming from 7200 cattle which Mr Bignell said is at least about 30 down on what it is normally taken from over 10,000, that’s back 30 per cent in terms of throughput.

“Last year we were benchmarking the EYCI at least over 10,000 (cattle),” Mr Bignell said.

The last yarding recorded for the Wagga market was 800 cattle which is the third lowest in the last three years. With the numbers so low Wagga is now making up seven per cent of the EYCI figures instead of up to 15 per cent with its normal yarding.