RECENT weeks have lead to the cattle market balancing on a knife's edge as the majority of areas remain in desperate need of rain.
The Upper Hunter has been on its knees for an extended period of time.
Meanwhile, the Lower and Mid Hunter has fortunately receiving small falls of rain keeping them out of gaol until now.
Unfortunately, now all sectors of the Hunter Valley are becoming very concerned as dry conditions really take a grip.
Right on cue the August winds have stepped into gear this week and placed even further pressure on the landscape.
Most areas away from the coast now have water concerns as creeks, dams and springs dry up.
Other than entering into the costly routine of feeding, producers now have no option but to place cattle into the market, driving downward pressure on pricing.
Thankfully, however we have a few things underpinning some much appreciated strength in the livestock markets.
The Australian dollar remains at record lows and this is helping our processors and exporters.
On Monday the Australian dollar was trading at about US68 cents, while about this time last month it was trading at about US71c.
Export markets continue to thrive, particularly into Asian markets and the demand for feeder cattle remains high.
In addition to this, a large number of restocker cattle are also being absorbed by southern areas which has been extremely helpful.
Some areas of northern Victoria are having a good season and this is creating better restocker buyer activity as these orders come further north into NSW.
These market dynamics have created an interesting trend.
It's driven a price gap.
This gap is rapidly widening between categories of cattle that are in demand, as opposed to those that are not.
Put quite simply, the quality cattle that satisfy orders continue to sell well, however the cattle that fall short on quality, genetics and conformation are now struggling exponentially each day, as worsening conditions take grip.
We have no doubt that when the rain relief comes, numbers will vanish driving prices rapidly higher.
Until that day, all we can do is remain positive and look after each other in what is becoming an extremely challenging time within the Industry. Bring on the rain.
- Scott Bailey is the director of Bailey Property and Livestock, Singleton, and a member of Australian Livestock and Property Agents Association (ALPA).