THE HOT, dry summer the Bureau of Meteorology has on the cards for most of Eastern Australia could put a serious dent in the restocker fervour that has fuelled the record cattle prices of 2016.
Increased supply in the latter months of 2016 brought the red hot Eastern Young Cattle Indicator back a notch to finish the year at 634.5 cents per kilogram carcase weight, down from its August peak of 725c/kg. It was still up 47.5c on the close-of-business figure last year.
The EYCI declined 10pc from September to December, which was very close to the seasonal pattern, according to Meat and Livestock Australia’s market analysts.
Saleyard throughput increased 64pc during that period, with big numbers coming off good oats crops in southern Queensland and northern NSW.
All cattle market chatter is now firmly focussed on southern weaner sales, which typically kick off a rise in the cattle market on the back of strong demand and fewer numbers on offer.
MLA’s experts say considering herd rebuilding is clearly underway, and given the increased supply of the past few months, that same pattern will more than likely follow again in 2017.
The EYCI declined 10pc from September to December, which was very close to the seasonal pattern.
- Meat & Livestock Australia
However, the likelihood of testing seasonal conditions through the three months ahead will only reduce restocker activity and to what degree that offsets the typical seasonal trend is the great unknown, agents and market analysts say.
Most beef industry commentators are predicting the 2017 cattle market to follow a similar path to this year but on a less intense scale - increasing to a late-winter peak then a spring decline.
The National Australia Bank’s just-released beef and cattle outlook has the EYCI at 500c/kg in the September quarter of 2017, which will still be above the range of prices prior to 2015.
Restocking interest had underpinned the high prices of 2016, the NAB outlook says, and while that had been supported by a wet winter and spring, as the weather dries out there would be considerable risk to saleyard prices.
Whether the weaker international beef outlook makes itself felt on the Australian cattle market sometime in 2017 is also yet to be seen.
MLA’s manager of market information Ben Thomas said the level at which the market eventually settled in the medium-term (2018-2020) would largely be dictated by the global trade environment, currency movements and the rate at which global demand increases.
MLA indicators show Queensland over-the-hook prices dropped to a similar degree as young cattle prices in the last few months of 2016. Their analysts say the competition between processors for the limited pool of cattle will, however, continue to be of assistance to the market next year.
In short, the young cattle market could be impacted by the summer heat, while the demand for finished cattle in the first quarter of 2017 is likely to remain strong.
