June 4, 2007

Australian beef prices gains momentum

Cattle yardings in Australia were up 10 percent last week, with Queensland registering the main increase. The influx of supply and limited numbers of finished lots have eased cattle prices as the national trade steer indicator was steady, at 187 cents per kilogramme (kg) liveweight (lwt). 

The Japan Ox indicator was down 4 cents at 170 cents and the US cow category fell 11 cents, to average 120 cents/kg lwt.

The cattle market has proved to be particularly volatile. Prices received across Meat and Livestock Australia (MLA) and National Livestock Reported Service (NLRS) said saleyards have been varied with fluctuations in selling conditions - particularly erratic changes in supply and large variances in quality.

The autumn season started with good rains in many areas, particularly across the eastern states with falls of 25 to 50 millimetres in central Queensland, west and central New South Wales and Victoria, with Southern Australian rain occurring predominantly in the south west. The NLRS reported sales for March slightly fell on the previous month but was still high in Victoria and NSW (New South Wales). Prices in the overall trend remained firm across most grades with some erratic changes experienced in the vealer steer market. The benchmark Eastern Young Cattle Indicator (EYCI) rose sharply in the first few days of March to settle at end the month at 340 cents per kilogramme hundredweight.

In terms of rain prospects and cattle quality being offered, the month of April has reflected a signalled an inferior quality of cattle being offered due to poor rains.  NSW and Victoria were most affected with no significant falls of rain being recorded. Production across these states decreased substantially on March's high levels, with NSW back 22 percent and Victoria falling 42 percent due to shorter weeks on public holidays.

Prices have also begun to take a sharp decline trend due to variations in the quality of cattle presented. Prices dropped at all categories and continued for the first three weeks of the month, before reaching the rock bottom. At that stage the EYCI resided at 291.25 cents/kg cwt. The indicator for trade steers was 175 cents/kg lwt and for Japan ox 164 cents, with the US cow price as low as 102 cents. The final week of April contrasted with the rest of the month, as prices regained the majority of the losses. The EYCI finished April at 321.75 cents/kg cwt.

After a steady start to May, demand for cattle in NSW, Victoria and SA (South Australia) gained momentum. Queensland had a continual flow of numbers from the central and north of the state. Falls of rain were received over NSW, Victoria and SA throughout the month, totalling over 100mm in parts, and this resulted in increased competition from all buyers. Processors and feeders vied to secure numbers of the better quality grades and restockers entered into the markets competing on the plainer quality pens. Production also increased significantly with national yardings up 36 percent on April, with NSW and Queensland rising 59 percent and 31 percent, respectively. NSW producers have taken advantage of the improved prices throughout May and, now that the change in the season is imminent, have continued to divest. Queensland, on the other hand, is facing an ongoing battle with lack of water and feed with continuous large yardings.

The large increase in throughput this week has caused young cattle prices to fall with the EYCI at the completion of sales Thursday last week at 320 cents/kg cwt. The eastern states Japan ox price ended the month at 168¢ and the US cow indicator averaged 121 cents/kg lwt - both down on last week.