ONGOING robust restocker demand, and a ramping up of feedlot buying, is clashing with limited supply to keep upward pressure on cattle prices.
The Eastern Young Cattle Indicator has lifted 75 cents a kilogram carcase weight in the past four weeks, to sit today at 1052c.
Many agents and analysts believe the stronger prices should very soon start to see a lift in saleyard numbers, resulting in at least some price levelling off.
It is further down the track, when the empty spots still left in paddocks are filled and supply starts flowing at far stronger levels, that many market participants are now expressing concern about.
The challenges mounting at the processing level pose significant headwinds.
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Rabobank senior animal protein analyst Angus Gidley-Baird says the good seasonal conditions and herd rebuilding is 'hiding the fact we can't get cattle through abattoirs at the moment'.
"Labour will be a real handbrake on the ability of processors to seek, and pay for, more cattle - and that can't be offset by strong global demand for beef," he said.
"Unfortunately, it is also a problem without an easy, or short-term, solution."
Mr Gidley-Baird said there had been positive growth in male slaughter figures for four quarters running, which means there are now more breeding cows and progeny on the ground, yet beef production was tracking the same as it was this time last year.
That was an indication processors can not get the numbers through the system, he said.
"At the moment, the market is accommodating this challenge because seasonal conditions are good and while ever there is grass, producers can keep growing cattle," Mr Gidley-Baird said.
"The real challenge will be if things turn dry - or when the paddocks fill up - and people have to sell and the big question is what that will do to the market."
NSW agent Luke Scicluna, Davidson and Cameron at Gunnedah, said that was certainly the biggest fear on minds at the moment.
Having just returned from the United States on a Nutrien-organised visit to cattle operations, he said big potential for Australian exporters was ahead when the US liquidation finally drew to a close.
"We went to feedlots that normally have 70,000 on feed but are now pushing 100,000, due to the fact they are taking lighter weight cattle," he said.
"There are massive cow kills still happening in the US. We visited saleyards that typically yard 800 head but are now marketing 2500.
"That means there is a lot of concern about where their supply will come from when it does rain - and that is a good sign for the future of Australia's trade to the US."
Tapping into that potential will hinge on Australian processors being able to operate at full capacity.
"Our biggest fear is if the tap turns off and we have to start lifting cow kills, how will our abattoirs handle it - you can't train people to handle knives overnight," Mr Scicluna said.
However, Mr Scicluna believes Australia's cattle market still has 'breathing space'.
"We won't have massive numbers in Australia for years yet," he said.
"The drought we had went on for a long time, so there are still many paddocks without livestock in them."
National Australia Bank's latest cattle price forecast still has the market remaining above pre-2020 levels well into next year.