THE dazzle has come off the young cattle market as supply has ramped up but agents and analysts agree there is enough feed in paddocks, and money in producer's pockets, to keep the downside in check.
Agents said easing prices were more the result of restockers only taking top quality at this point of the herd rebuild, rather than a rush of offloading ahead of a perceived cattle market drop.
The benchmark Eastern Young Cattle Indicator has dropped 35 cents a kilogram carcase weight over the past week to sit this morning at 1050c. In the past four weeks, it has dropped 60c and is now at its lowest point since October last year.
Supply has lifted by around 30 per cent in the past three weeks, driven mostly by Queensland.
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Meat & Livestock Australia analysts attribute the declining EYCI to that uptick in supply, wet and wintry conditions affecting the finish of stock presented for market, quality disparity across yardings and a lack of processors operating at saleyards.
The quality of the article buyers were looking for significantly influenced their propensity to pay and with plainer types being yarded, that had driven demand down, they said.
Queensland agent Terry Ray, Landmark Emerald, said the drop in young cattle prices was from an all-time high and there was still plenty of optimism in the cattle business.
The declining market was unlikely to make anyone rush out to sell, given they had feed in paddocks and had received relatively good incomes for the past two years, he said.
"Seasonally, it has been as good as we've had for a number of years and that has given a lot of producers the inclination to get more growth on their cattle," he said.
"We are expecting a lot of good slaughter cattle, some coming off winter oats and others off pasture, around October and November."
That lift in supply at year's end is influencing forecasts of a further reduced EYCI by the start of 2023, however analysts add the caveat that it won't be a 'bottoming out'.
ANZ's latest agri commodity report says that while cattle prices may have eased off their record highs set in January, the medium to long term outlook could well see the EYCI remaining around the 1000 c/kg level for at least the next two to three years.
ANZ's analysts point to the strong outlook for domestic and export consumption as economies continue their post- COVID recovery, despite some question marks over the impact of global rate rises.
Perhaps more importantly, however, is the longer-term weather forecast is for a combination of good rain and reasonable growing temperatures, which should see adequate feed continue at least until well into 2023, the ANZ report said.
ANZ's executive director of agribusiness research Michael Whitehead said arguably, in the absence of a black swan event such as a drought, there would appear no major reason why cattle prices should fall markedly for at least the next year or two.
"However, some slowing in cattle sales to both processors and feedlots could occur if labour shortages continue to restrict operational capacity at abattoirs," he said.
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