March 26, 2007

Weaker demand for Australia's cattle exports
 

Statistics from Meat and Livestock Australia (MLA) show increased supplies and weaker export demand contributed to the Australian medium steer price finishing Thursday trading 2 cents lower, at 174 cents per kilogramme liveweight (kg/lwt). The Japan ox indicator settled at 176 cents, two cents/ kg lwt below last week. Young cattle prices were assisted by feeder support, although the Eastern Young Cattle Indicator (EYCI) slipped 5.5 cents to 342 cents/kg hundredweight (cwt).

Medium weight grown steer prices have also weakened over the past few weeks due mainly to softer export demand from Korea and, to a lesser extent, Japan. Additionally, supply has been higher, with national saleyard throughput increasing 19 percent.

Cattle production in Queensland increased by 21 percent while normal full trading weeks in the southern states have contributed Victoria of 41 percent more stock.

On the other hand, the national medium steer indicator had been gradually increasing from the beginning of the year. However, a relax in demand from north Asian markets and a higher Australian dollar initially forced direct to works quotes lower in the north, which was followed by an easing in prices in the physical markets.

With many areas again experiencing feed and water concerns and the likelihood of an autumn break diminishing, producers are offloading higher numbers. Any sign of prices coming off the boil after positive improvements also tends to cause some panic selling. There have been much larger numbers coming onto the market at central and northern Queensland markets despite many of these areas having the capacity to withhold stock at present.

Meanwhile, MLA figures show cattle market flows at Western Australia (WA) has witnessed increased yardings of mixed quality cattle selling to fluctuating trends throughout 2007.

The MLA also reported drought conditions in the southwest and south coastal areas of WA and exuberant feed prices have left many producers with little option but to de-stock. The situation has led to an increase in lightweight and unfinished cattle, with only minimal numbers of prime supplementary and grain-fed yearlings at each sale. Nevertheless, demand from restockers and feeders have remained strong, pushing prices to dearer levels. Competition from live exporters has also aided a dearer trend over the past week.

WA yardings were up 19 percent on last week, however, year to date supply is on par with 2006. This is despite opposing forces of nature influencing supply in the respective years, with the drought in 2007 and severe flooding in 2006.

Young cattle prices have seen a slight turnaround from the falling levels of February this year, to rise slightly in March, albeit at significantly lower levels than 2006. The WA young cattle indicator, however, currently stands at 155 cents/kg lwt, a decrease of 9 percent on both last week and the same time last year. With the smaller yardings and strong feeder and restocker activity, producers may again reap the benefits of a dearer market.

Prices for cows in the physical market have experienced a downward movement of 9 cents on last week to finish at 94 cents/kg lwt. Additionally, WA cow prices are down 22 percent for the same time last year.