IN mid 2014 Lee McNicholl alerted me to the Taranaki cattle market reports which showed how far ahead our near neighbours across the Tasman were in prices being received at that time.
That was a good pointer to what Australian producers might expect when demand, supply and slaughter capacity factors moved more in their favour in 2015.
With the heady peaks of 2015 now behind us, the question that everyone seems to be asking is what lies ahead for the rest of this year and beyond.
A big part of the concern at present is the big disparity between store and fat cattle prices and massive losses being reported in the feedlot sector.
As was seen last week with AuctionsPlus recording a passed-in rate of more than 40pc, store cattle prices are coming under a bit of pressure but some very good sales are still being recorded.
Across the Tasman, store cattle prices seem to be holding up quite well.
At the special Taranaki weaner sale last week lightweight Angus steers weighing 140-230kg sold from 331-401NZc/kg. That converts to 298-361Ac/kg.
Hereford/Friesian calves did a bit better at 341-517NZc/kg which equates to 307-465Ac/kg.
But the fat market is a different story.
At the Taranaki prime sale, Hereford bullocks weighing 495-605kg sold from 263-274NZc/kg. That is 237-247Ac/kg or 430-450Ac/kg dressed weight.
That is a fair discount from last week’s southern Queensland four tooth ox rate of 490-495c/kg.
However it is the cow rate that might cause a few second glances.
Hereford/Friesian cows weighing 645kg made 193NZc/kg and that stood out from the next best heavy cow price I could find of 179NZc/kg.
The 193 price converts to 174Ac/kg or around 350Ac/kg dressed weight. That is almost 100c/kg lower than southern Queensland cow rates.
So, are cow prices here likely to follow the New Zealand example?
Recent adjustments to over-the-hooks prices have all been southbound but how far down that path they go would seem to depend on the extent to which drought-depleted supply can maintain some price pressure in the opposite direction.
Relative to their New Zealand counterparts Australian producers might just have the better of it for the time being but the reverse side of that coin means Australian processors and exporters are at a disadvantage relative to their counterparts.
High cattle prices and production costs mean that Australian exporters have to ask high prices in markets such as the US.
That will continue to present a very significant challenge this year in the face of increasing US domestic production, flat foodservice and retail demand and strong export competition particularly from New Zealand, Mexico and potentially Brazil later in the year.
Prices holding as kill rises
NATIONAL (eastern states) slaughter stepped up to the second highest figure seen so far this year with MLA reporting 145,509 head killed last week, an increase of over 4000 on the week before.
Queensland accounted for 2400 of that increase taking the week’s tally to 70,687. New South Wales and Victoria recorded gains of 1000 and 500 head respectively.
With Kilcoy coming back into production this week, all Queensland plants should now be pretty much at a nominal full production level excluding overs and weekends.
One southern Queensland processor said earlier this week that numbers were coming through at a steady pace but how long that might last remains to be seen.
For the moment cattle prices remain unchanged. Four tooth ox are quoted at 490c/kg and heavy cow at 445c.
Going forward however the news on the sales front in the US is not encouraging.
Analyst Steiner Consulting believes that once the beef features for Memorial Day (last Monday in May) are covered there will be fierce competition with other proteins pressuring cattle and beef prices lower.
