Widespread rain and warm weather is what our markets require to bounce back from the doldrums.
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There are many factors affecting both the cattle and sheep markets at the moment.
First and foremost as always is supply and demand.
Demand has dropped off around the world, with cost of living pressures biting hard due to the post COVID-19 turmoil of rising costs including interest rates.
Oversupply is being maintained with not much let up of the hot and dry conditions in the US.
Supply is increasing locally as herds and flocks continue the post drought rebuild.
Exporters are finding the sales of meat overseas are dropping off due to cost of living pressures, this in turn also puts downward pressure on our domestic meat market.
The world red meat supply will become very interesting when there is widespread drought breaking rain in America. You would have to think that the world supply chains would have to empty out rapidly.
In recent weeks and months we have also started to see a dry weather sell off in some areas.
Many producers have also found themselves carrying extra stock suitable for the last couple of La Nina wet years.
Producers are understandably gun shy with very vivid memories of our last big drought and media speculation of another looming El Nino.
When a producer is forced onto the market all bargaining power goes out the window and we become price takers. Rain gives the ability to hold stock back from sale and negotiate a fairer price.
The past two weeks have however seen some stabilisation in the cattle market due to isolated good falls in the south with cattle regaining some ground.
Restocker weaners have regained up to 25 cents a kilogram (liveweight), light feeder cattle have gained 10c/kg to 20c/kg and cows have tended to hold firm.
As I started with, rain, rain and more rain. More rain will be needed for these values to be maintained.
Sheep and lambs haven't been as lucky with lighter trade and Merino lambs back this week losing either side of $10 a head.
Mutton has stayed firm at 330c/kg to 380c/kg (carcase weight) while most grades of lambs are either side of 500c/kg.
The season around the state at the moment is varied with rapidly drying conditions in the north of the state.
Conditions improve as you head down towards Gunnedah and further south with some producers having cattle on oat crops.
Warmer regions in southern NSW are looking very good with lush crops and fat stock.
Colder areas of the south have also had rain and are looking toward an improved spring. Northern Tablelands is suffering the effects of a hard winter with cold temperatures and a lack of rainfall.
On a more positive note, I believe these are short term issues in the whole scheme of things.
With an ever increasing world population, westernisation in areas of Asia, the growing demand for protein, and new developments taking over productive land around the world, I believe the red meat industry will have a very sound future.
- Andrew Pitman is a director of Pitman Deakin Pty Ltd, Moree.
Stock Talk is written by a range of stock and station agents from across NSW. It reflects their opinions and observations from their local district.
