Southern rain supports restocker intent

The Eastern Young Cattle Indicator (EYCI) sat at 528.25¢/kg carcase weight (cwt) yesterday, 31¢ above year-ago levels, despite little improvement in conditions across large parts of the eastern states.

Since the beginning of July, 51% of EYCI-eligible cattle have been sold through NSW saleyards, with 43% and 6% yarded through Queensland and Victoria, respectively. While the majority of the eastern seaboard continues to struggle through what the Bureau of Meteorology has now classified as the worst drought on record in the Murray Darling Basin, some recent rainfall in the south has supported restocker intent.

Victorian young cattle as a result, have maintained a premium to their northern counterparts throughout winter so far. At a state level, the average price for the EYCI in Victoria has been 559¢/kg, up 30¢ from the same period last year, with NSW also improving 17¢ from 2018, to average 515¢/kg cwt. Queensland, on the other hand, eased 4¢ from year-ago prices to average 487¢/kg cwt.

So far in July, 43% of EYCI-eligible cattle purchases have been made by restockers, up 2% from the same period in 2018. The north hosts larger numbers of restocker cattle, with Queensland contributing 55% of restockers, while NSW and Victoria have accounted for 44% and 2% respectively. Fewer store cattle, elevated competition and recent widespread rainfall throughout Victoria, has resulted in a premium to NSW and Queensland restockers. Victorian restockers are currently averaging 535¢/kg cwt, a premium of 39¢ to NSW and 48¢ to Queensland.

Feeder cattle have accounted for 42% of EYCI-eligible cattle for July, level on 2018. NSW has supplied 59% of EYCI-eligible feeder cattle for the month-to-date, with Queensland and Victoria contributing 36% and 5% of feeders, respectively. Competition has been buoyed by NSW buyers who are operating at a 20¢ premium to Victoria and 68¢ to their Queensland counterparts, averaging 566¢/kg cwt for feeder cattle.

Since 1 July, 15% of EYCI-eligible cattle have been purchased by processors, remaining steady with the same period in 2018. Victorian buyers are trading at the highest premium for processor cattle at 570¢/kg cwt, 60¢ above NSW and a 118¢ premium to Queensland. This disparity between the north and south is driven by a tightening pool of EYCI-eligible cattle in the south.

Looking ahead, the latest BOM outlook favours a drier than average three months, with most of the eastern states given a less than 40% chance of exceeding median rainfall. A continued lack of rain will likely keep young cattle prices in the balance until a significant, widespread break occurs.

© Meat & Livestock Australia Limited, 2019

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