Gaps widen between restocker and processor buying sentiment

Shan Goodwin
By Shan Goodwin
January 18 2022 - 3:00am
Gaps widen between restocker and processor buying sentiment

RAIN, and the forecast of more, continues to underpin confidence in the cattle game within restocking and lot feeding circles, which is keeping most market categories at close to record levels.

However, the pressure abattoirs are under with workforces shattered by Omicron infections is starting to show up in categories where processors typically dominate buying.

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Meat & Livestock Australia market information manager Stephen Bignell said medium cow, medium steer and heavy steer prices had opened 2022 significantly down and were continuing along that path.

The medium cow indicator opened 6.4 per cent lower than it finished last year. As much as 80pc of buyers in this category are processors, he said.

"We are starting to see a very different story between the sentiment of processors and that of restockers or lot feeders," Mr Bignell said.

On the supply front, volumes are shrinking and Mr Bignell felt there was a good chance producers would start to hold back stock even more on account of what is happening on the processor scene.

"They have grass, they can feed out to heavier weights. Producers certainly aren't in a position where they have to sell at the moment and many will want to see how the situation at plants plays out," he said.

Yardings had started to reduce prior to the unfolding processing drama, with MLA data showing east coast cattle numbers presented at the saleyard for the first week of January were 62pc under the seasonal trend.

The only place bucking that trend is Western Australia, where cattle yarding levels opened 2022 with volumes 21pc higher than for the same week in 2021 and 51pc more than the five-year average pattern.

The Western Young Cattle Indicator opened 20 cents higher on the end of 2021 but has now dropped back to 1129 cents a kilogram carcase weight. Feeders are taking a whopping 64.5pc of western cattle at the moment.

As for the Eastern Young Cattle Indicator, analysts say there may not be much more upward movement to be had but tighter supply will only contribute to holding prices close to where they are now.

The EYCI finished yesterday at 1151 cents a kilogram carcase weight, having dropped daily since opening last Wednesday below the 1169c level at which it finished 2021.

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Longer term, Mr Bignell said supply was still expected to increase this year as the herd rebuild plays out, putting downward pressure on prices.

However, just how much impact current processing disruptions will have on young cattle prices in the short term remains unknown.

Certainly, the abattoir staffing shortage issues are showing up in slaughter rates in a big way, with East Coast numbers processed in the first recorded week back a massive 65pc below the same week in 2020 and 41pc below last year.

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Shan Goodwin

Shan Goodwin

National Agriculture Writer - Beef

Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally.

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