AN ATTRACTIVE punt is on offer for producers with the guts, and cash, to restock their young cattle herd in a rebounding market.
However, forecasts indicate significant dividends could flow when supply starts to bottom out next year.
Widespread rain brought life back to the young cattle market in the past fortnight.
The Eastern Young Cattle Indicator (EYCI) jumped to 590.75 cents a kilogram (carcase weight) this week, up almost 30c/kg on this time last week.
Nevertheless, restockers supported the tight market, said Mecardo analyst Augusto Semmelroth.
“We’ve seen a huge reversal in the past fortnight,” he said.
“Demand from restockers is back and they’re buying all categories from weaners to yearlings.”
In the state’s north, demand was spiking.
“EYCI-type cattle are in big demand north of Dubbo right up to Southern Queensland.
“They’re getting much higher prices than in Ballarat.”
Mr Semmelroth expected prices to continue to improve as demand increased.
“Chances are if we have an average season from now on, young cattle will become even more expensive,” he said.
“We might see a bit of a lift in supply and prices stabilising but if we see more rain forecast prices will continue to rise.”
Producers might miss out on profits now if they waited to restock later in the season, he said.
“If you’re buying a young feeder steer at this level you’ll still make money on it in three or nine months’ time as stock will be low next year.”
He said feedlotters could struggle to fill supply as more restockers entered the market.
PT Lord, Dakin and Associates livestock agent Sam Christensen, Dubbo, said the resurgence of the EYCI had created a good opportunity to buy cows and calves.
“Cows and calves are a good deal right now,” Mr Christensen said.
“It’s safe money.”
But Ray White Livestock agent David Armitage, also of Dubbo, said breeder cattle could be hard to find.
“A lot of breeding stock has already been sold,” Mr Armitage said.
He said dry cows were his pick because they tended to finish faster.
Mr Christensen said last week’s prime beef sale yarded 3500 head and he expected this week would be larger.
“The people who couldn’t sell last week because of the rain will come in this week and the people who were there last week will come in again,” Mr Christensen said.
Landmark livestock agent Scott Simshauser, Tamworth, said while prices were good, “genuine” store stock in the area was limited.
“People are determined to buy anything they can value add to but the store cattle we saw this week showed a little bit too much shine,” Mr Simshauser said.
“We had good early rainfall around here so it looks like people could struggle to find something they can really fatten up.”
Elders Livestock sales manager Peter Cox, Wagga Wagga, said there was “good restocker activity for every category of animal” in the south.
But he cautioned producers from rushing to the saleyards on the back of a rising EYCI.
“Producers need to do their due diligence on the markets they’re looking to buy and sell into,” Mr Cox said.
“The prices we’re seeing this week are only partially to do with the rain – we’ve never seen such short supply.
“To rush in and buy now because you think it’s going to get dearer is not a good move because it’s just such a big capital outlay.”