THE battle between processors and restockers shot young cattle prices to a two-year high this week with demand for females driving the surge.
But if widespread rain is added to the mix, female prices could lift beyond the reach of restockers.
Signs of a red-hot market have already begun to emerge with the Eastern Young Cattle Indicator (EYCI) hitting 362 cents a kilogram (carcase weight) at the end of trading on Tuesday.
This is 60c/kg higher than this time last year.
It is still a far cry from the record EYCI set just before Christmas in 2011 of 428c/kg, but good rain could change the situation fast.
So far, the biggest improvement has been for female cattle as restockers push up demand on the back of processors topping up orders with these lines.
Cows with calves also demonstrated the rise in competition for females with prices topping at $1424 at Dubbo this week.
The greatest sign of price strength returning to the Dubbo market, however, was that prices increased across all categories, despite increased supply and plain quality.
Wodonga’s regular store sale last Thursday was also strong for females – cow units topped at $1340.
But the big prices for females has some agents concerned.
Paull and Scollard agent, Tim Robinson, Albury, said the number of females coming out of the paddock and heading to processors was huge throughout southern NSW and the north-east of Victoria.
“When the season changes, demand for restocking females could surpass records previously seen,” he said.
At the end of the day females aren’t usually the first choice for processors, but if prices continue to get dearer the store market will have to find a new level as well.
He said a big framed 600kg cow at 165c/kg was worth $990. If it also has a $300 calf the package adds up quickly.
“So if a processor is prepared to buy 1000 cows and calves and split them, a restocker is going to have to be prepared to outbid the processor,” he said.
Mr Robinson said some people had been prepared to buy cheap cattle from the north this year and put them on crop and this would have paid off well.
“But there’s not massive amounts of pasture here, it’s only the crops that have given people the bulk amount of feed and the ability to turn them over relatively quickly,” he said.
“The season in the next two weeks will have a huge impact on what happens and if this week’s rain fizzes out a lot of the optimism of a spring will fade out too.”
At the same time, processors continue to seek finished cattle to be absorbed into the sizzling beef export markets.
Beef export volumes have sustained a high pace during August, recording the second highest export month on record and fired up by the recent drought induced spike in slaughter.
He said with top old cows now only 10c/kg to 15c/kg behind most bullock prices, the effect of this growing demand for global fast food production was now becoming evident.
ANZ agribusiness research director Michael Whitehead last week forecast Australia’s beef export to China could be worth $130 billion by 2030, owing to a fall in China’s beef “grey trade” (the unofficial imports of beef into China, such as Brazilian and US beef entering through Hong Kong, Indian buffalo meat through Vietnam, or cattle through Bangladesh) and an increase in beef consumption the domestic industry cannot keep up with.
“The Chinese beef industry currently provides about 81pc of domestic demand,” he said.
“Our research suggests that by 2030... imports will need to rise almost 250pc.”
Agents and analysts have tipped a boom in cattle prices for some time, but the limited factor was the season.
Agripath consultant Sam Newsome, Tamworth, said from spring onwards supply from Queensland traditionally slowed, so with the current strong export market, only rain was needed to push prices along.
“Restocking may be on a dearer market, but if producers have feed and can see a margin ahead, that will provide some confidence,” he said.
Coonamble stock and station agent Peter O’Connor, AJF Brien and Sons, said the feed grown in the past month was good quality but wasn’t enough to get through summer.
Ray White Emms Mooney stock and station agent Harry Larnach, Oberon, said the cattle market has been very solid for the past month, particularly the grinder beef market and heavyweights, which were making more than 200c/kg.
Meat and Livestock Australia reported feed conditions had assisted the capacity for producers to bid, and for many the situation was below par, but good falls next month to really ignite spring pasture growth would go towards 2014 bucking the traditional young cattle spring price decline.
Sideline a nice earner
CATTLE are a sideline at “Wonga”, Tarana, and in some years a very good sideline.
Wonga is predominantly a finewool operation, and Richard Webb is running 47 13-month-old Shorthorn/Angus steers to hit the feedlot market by Christmas, targeting the 400- to 500-kilogram range.
Mr Webb’s steers were weaned earlier than he would have liked, at three months, because the season had been dry until April.
“It was a learning curve, that’s for sure,” he said. “We now know we can wean that early if need be.”
The cattle market had improved on the back of a good start to spring, he said.
“The rain has just topped it off this year. The season has really lifted its game.”
Mr Webb said he had entered the feedlot competition at Teys Jindalee, Springdale, for the past three years and appreciated the feedback.
– KATE PEARCE