CQ winter rain welcome

“This latest rainfall event is the fourth in North Queensland since May 1 in a part of Queensland that gets winter rain about once every 10 years,” he said.

“There are certainly some records broken in Central Queensland rainfalls.

“This rain event has delivered falls from 110-400mm through Rockhampton, Emerald, Clermont and Mackay.

“Country around Alpha has recorded 50-100 mm and going north to Charters Towers about the same 50-100mm. West from Charters Towers the falls were lighter with Hughenden, Richmond getting from 60-80mm and Cloncurry 30-80mm.

“Any rain is good rain but to get falls of this magnitude at this time of the year will provide enormous benefit.

“The cropping areas around CQ will be assured of a winter crop with large areas of chickpea already planted. Any sorghum that wasn't harvested in the Clermont area will be most surely lost,” Bernie  said.

“This will further tighten the supply of cattle with the cattle market already at record levels.

“On market rates feeder steers in Central Queensland are making up to $3.50/kg and weaner steers anywhere up to $4/kg.

“Further north at Charters Towers, live export feeder steers are quoted at $3.25/kg and their heifer equivalents are quoted at $3.00/kg.”

Bernie said it would be interesting to see where the market goes from here. “In my time in the business I have never seen the market as dear.”

Meat & Livestock Australia reported that after weeks of consecutive gains, the Australian cattle market paused for a breather last week, with all of the eastern states’ indicators relatively similar to the close of markets last week.

The Eastern Young Cattle Indicator (EYCI) closed the week at 656¢/kg cwt, back 2.25c from the previous week, while heavy steers were 325c/kg lwt.

As has been the case for the past few months, limited availability offered support to the market again this week, with weekly saleyard throughput at 48,294 head, down 17pc from the same time last year.

The only resistance came from reduced processor activity, which was reflected in the eastern states’ weekly slaughter, at 132,192 head, down 19pc year-on-year. Notwithstanding, the reduced shifts are largely the result of the Australian cattle herd being at its lowest point in 20 years.

Sheep and lambs recovered some of the losses from the previous week, with all eastern states indicators edging higher. In a similar fashion to beef, the limited availability is offering assistance to the market and will likely remain supportive until the spring flush hits in the coming months.

The Eastern States Trade Lamb indicator closed last Thursday at 639c/kg cwt, up 21c from the previous week, while mutton was 20c dearer, at 397c/kg cwt.

Meat & Livestock Australia reported the Australian Bureau of Statistics (ABS) indicates Australian beef production in May was almost 204,000 tonnes cwt, back 11pc year-on-year, bringing the year-to-May total to just over 914,000 tonnes cwt, back 14pc.

Adult cattle slaughter underpinned the decline in production, with the national year-to-May total back 17pc year-on-year, at 3.19 million head (ABS).

Production was partly offset by increasing carcase weights, after an improvement in seasonal conditions across parts of the country and relatively large numbers of grainfed cattle coming forward to slaughter – year-to-May average male carcase weights were up 10kg, at 318kg, while females were up 5kg, at 253kg.

Accounting for 48pc of national cattle slaughter so far this year, females have represented a larger share of the decline in the kill – the female share was 51pc during same period in 2014 and 2015. However, there are conflicting trends in the female kill across the country, possibly reflecting reports of increased dairy cattle slaughter.

In Queensland, the female portion of the cattle kill was 45pc in May and has averaged 39pc so far this year, reflecting the tight supply of females available and intention of restockers to maintain or rebuild herds. In the wet years of 2010-2012, the Queensland female kill averaged 40pc of the state total between January and May, while in 2014 and 2015 it increased to 47pc and 48pc, respectively.

However, the same trend is not evident in NSW and Victoria, where the female portion of the kill has averaged 52pc and 60pc, respectively, so far this year – up from 49% and 56% the same time last year. While slaughter has declined overall, across these two states the reduction has been most noticeable amongst the male portion. As illustrated in the figure below, in addition to seasonal conditions, there is a negative relationship between the female portion for the kill and the global dairy price (FAO).

Albeit a drought year, south eastern female cattle slaughter spiked in 2009 when the dairy price collapsed post-GFC. In addition, when dairy prices rallied in 2013 and early 2014, the female kill in Victoria did not reach the same high as the previous drought. Victoria, in particular, with the vast majority of the national dairy herd, appears relatively more sensitive to movement in dairy prices.

With much of the south east Australia receiving close to average rainfall in the first half of 2015, the female portion of the kill declined. However, over the past nine months, this trend has reversed – due, in part, to the hot and dry southern summer but also the collapsing world dairy price. The FAO world dairy price index averaged 135 points in the six months of 2016, close to half where it peaked in early 2014.

Despite the eventual autumn break in May across much of the south east, the female portion of the cattle kill did not decline, indicating other forces were at play.

With a positive seasonal outlook from the Bureau of Meteorology, female cattle slaughter should continue to decline as producers rebuild herds that have been contracting over the past three years. In addition, for those tracking the female portion of the kill, it should also be considered in conjunction with recent trends in the dairy market – the south eastern Australia female beef cattle portion of the kill may, in fact, also be decreasing but is hidden in the data due to the dairy influence.

Jason Thomson, Schute Bell reported a larger than expected national offering (no doubt due to the four week rally in wool prices) and the Aussie dollar climbing against the US placed downward pressure on this week’s sales.

The largest falls were in the mid micron Merino Fleece types with this area of the market being the greatest beneficiary of price rises over the past month. Some of the more stylish superfine types managed small gains, 37,556 bales were sold for the week nationally with 8.3pc passed in. Major buyers included Techwool, PJ Morris and Chinatex with the top four accounting for almost 50pc of the Merino Fleece offering.

Forward markets were fairly strong early in the week on limited volume but the extent of this strength rapidly declines after mid September. 21 microns did trade to 1400 cents in early September which is around a 5pc discount to this week’s physical close.

Wool sales are now in a three-week recess with sales due to resume the week of August 8. Rostered quantities have not been released as yet for the resumption but it would be reasonable to expect a 50,000 bale offering.