Elders Business Intelligence Analyst Richard Koch discusses his data driven forecast for the Australian cattle market this autumn.
Despite strong ongoing international demand for Australian beef and solid export values, the Australian cattle market was heavily influenced by mixed seasonal conditions through the summer quarter which has affected local supplies and created a two-paced market.
This chart shows export prices to the US for 90CL manufacturing beef in Ac/kg. Source: MLA.
Slaughter cattle have performed in line with expectations and improved throughout the quarter, while prices for feeder and restocker cattle have underperformed as seasonal conditions have disappointed.
The failure of the southern wet season and the late arrival of the northern monsoon season meant that cattle turnoff through the summer quarter was higher than anticipated, particularly of feed-on cattle, which meant that by the end of the quarter, prices for these cattle were 20 to 30c/kg lw below our forecasts.
Source: National Livestock Reporting Service (NLRS) & Elders forecasts.
This chart shows national saleyard indicator prices and forecasts for major cattle categories. Source: MLA & Elders forecasts.
The outlook for the autumn quarter is a tightening in supplies of both slaughter and feeder cattle, particularly across southern areas. Solid processing margins will underpin slaughter cattle values with the extent of price appreciation dictated by the strength of local supplies. As supplies tighten into autumn, prices for slaughter cattle will continue to appreciate.
We expect southern processors to start heading north, earlier than usual, to source cattle to fill slaughter schedules. This will provide competition for northern processors and lead to a general appreciation in slaughter cattle values. Feeder cattle markets will be similarly supported by increased southern feedlot competition for dwindling supplies of heavy feeder cattle, which should support a general lift in feeder values as they head north for suitable cattle supplies to fill feedlots.
Restocker cattle values will be dictated by the season. A strong early break across the south will see southern producers become more active in restocker markets as they look to rebuild herds that have been downsized the past few years. Conversely a continuation of dry conditions throughout autumn will see saleyards increasingly dominated by cattle of store condition which will drag on these cattle values.
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