What’s behind the big dips for both sheep and cattle prices

Another week of livestock sales and another round of price falls in both store and prime sales as the sector tightens with FMD lingering.

The honeymoon for sheep and cattle prices seems all but over as a myriad of factors push down prices and confidence.

Increased offerings from a growing herd and flock, processor challenges, fears around a potential foot and mouth incursion combined with falling prices are eroding confidence in the industry after a stellar few years.

Auctioneer Leo White and Tom Madden, T.B. White & Sons, Ballarat. Picture: Yuri Kouzmin

The benchmark Eastern Young Cattle Indicator closed on Monday at 940c/kg carcass weight, down 111c/kg in the past month while the equivalent trade lamb indicator finished at 690c/kg carcass weight with only one indicator – heavy lambs – tracking above 700c/kg.

Global Agritrends analyst Simon Quilty said the herd rebuild, led by Queensland, was pushing more cattle numbers into the market, and prices were reacting.

“Prices are falling due to increased numbers to a certain extent, but there is also sluggish demand from two of our major customers – South Korea and Japan,” Mr Quilty said

“The Australian dollar has also risen 3 per cent in the past 10 days so it’s like the perfect storm – more cattle led by Queensland, softer global demand and a rising currency.”

Mr Quilty predicted prices would continue to slip, and while some producers would hold out on the hope of a rise, others may “take their medicine and sell”.

The one bright spot in the market is for heavy steers, which closed on Monday at 456c/kg liveweight, up 68c/kg in the past week which he said was due to a shortage of this type.

TB White and Co livestock manager Xavier Bourke from Ballarat said prices drops of up to $300 at the centre’s store sale last week showed a lack of confidence.

“Certainly there is not a lot of confidence around at the moment and it was probably the worst week to have a store sale given all the talk about foot and mouth disease,” Mr Bourke said.

“We saw the sale as $200-$300 cheaper – the prices are good still but are off those extreme highs we were seeing.”

In the sheep market, rates are also dropping with Nutrien Bendigo agent Nick Byrne putting the drop down to labour shortages at abattoirs due to Covid, poorer winter-affected quality of yardings and consumer push back over high prices.

“I think we have all become accustomed to high prices and good seasons, because we have had these over the past three years, and usually we only get one or the other,” Mr Byrne said.

“Good quality lambs are still making reasonable returns, it’s just that we are used to everything selling well when now poorer quality is being discounted.”