Heavy wet weather premium evaporates

As numbers have returned to the saleyards, some of the “wet weather premium” that sporadically popped up in finished cattle in recent weeks has begun to evaporate. However, despite a surge in supply of young cattle, prices are holding relatively well- it remains to be seen whether healthy demand will persist though, or it’s a carryover from unfulfilled interest in the prior week.

Despite the continual torrent of rain, and the impact on roads, cattle are clearly still getting though to the processors, with east coast slaughter holding relatively steady last week at 92,326 head. Admittedly, numbers in QLD and NSW were down on the prior week by 3%, and 4% respectively, while VIC slaughter surged 17% to 11,951 head.

Cattle Market as of 4 November 2022:

The Eastern states Young Cattle Indicator (EYCI) slipped back 22¢(2%) to settle at 1,019¢/kg cwt. Roma Store, Dalby & Wagga were the big influences on the index, at 30%, 15% and 9% respectively, With Dalby & Roma Clocking in steer prices of 1,019¢/kg, 1,013¢/kg, while Wagga achieved a more hefty 1,079¢/kg. All things considered though, the index held up remarkably well against a surge in supply of over 100% from the week prior, to 14,133 head- the second biggest yarding seen in the last 6 months. Numbers were down last week though due to bad weather, so pent up demand has probably created temporary support.

The Western Young Cattle Indicator (WYCI) gave up 40¢(4%) this week to close at 948¢/kg cwt. support was provided by a reduction in the vealer proportion of the index, and a small lift in average steer prices to 920¢/kg cwt, but it was a 86¢(9%) drop in average WA heifer prices that was the main cause of the fall.

East Coast cattle slaughter - 5 year average

Preliminary national yarding numbers this week indicated a 40% increase in offerings, to 42,000 head nationally. The recovery was mainly in NSW and QLD, however, VIC numbers dropped.

East Coast cattle yardings - 5 year average

The national indicators revealed a fall in prices for most specifications, with finished heavy steers and medium steers both booking 7% falls to 449¢/kg and 448¢/kg, indicating that the impact of the floods on availability of finished cattle in prior weeks caused a bit of a wet weather premium, that has retreated now supply has begun to flow again.

National Indicators (lwt) as of 4 November 2022:

Cattle market price indicator 4 November 2022

The 90CL frozen cow price was static in US dollar terms last week, but advanced 1% to 869¢/kg swt on the back of the depreciating AUD. The outlook is a bit of mixed bag- on one hand, US consumer demand is still looking extremely uncertain, but on the other, there is an expectation that the US cow cull will need to come to an end and conditions will improve, (surely the drought won’t drag on longer?) reducing US domestic supply, and increasing demand for imported product next year.

Flooding impact on communities and pastures:

The floods are subsiding many communities, and the BOM’s cumulative week ahead rainfall forecast for much of the east coast is a lot more moderate, at sub 10mm, with the exception of VIC, which is tipped for another 25mm.

However, paddocks are still pretty muddy, there are repairs to be done, and a lot of roads remain closed, so yardings will likely remain relatively subdued. While the rain has brought a solid moisture profile, in many areas, pastures may have sustained damage from the inundation, and it may take producers several weeks to get a clear picture of the likely impact to their available feed this season, and whether extensive spelling of paddocks will be necessary.

Heavy wet weather premium evaporates

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