South leading cattle markets

South leading fat and store markets

Sales
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A mixed bag of seasonal conditions is having a big impact on activity in the fat and store markets, writes Ken Wilcock.

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Queensland quickly followed the southern market trends with prices for good heavy cows jumping 22c to reach 299c at Blackall last Thursday.

Queensland quickly followed the southern market trends with prices for good heavy cows jumping 22c to reach 299c at Blackall last Thursday.

SEVERAL weeks ago southern markets in NSW and Victoria started to push back up over the 300c/kg mark for good heavy cows and opened up a significant price differential with southern Queensland.

But southern operators intent on taking advantage of this opportunity barely had time to organise their border passes as Queensland quickly followed the southern trend.

Dalby last Wednesday jumped 19c/kg to reach 298c and Blackall did even better last Thursday with a 22c rise to reach 299c.

Just how high this current run goes and how long it lasts remain to be seen as the market fundamentals at global level are far from stable.

In the US, COVID-19 led to a massive hike in domestic wholesale beef prices and that in turn overflowed into the market for imported beef.

In consequence, Australian exports to the US were starting to trend up after comparatively low volumes in April and March.

Data for the first two weeks of this month predict a substantial increase in export tonnage to the US in May and this may improve even further with reworked product as a result of China suspending imports from four Australian beef plants.

But as quickly as the US retail market went up, it may just as quickly come back down.

Just how high this current run goes and how long it lasts remain to be seen as the market fundamentals at global level are far from stable. In the US, COVID-19 led to a massive hike in domestic wholesale beef prices and that overflowed into the market for imported beef. In consequence, Australian exports to the US were starting to trend up after comparatively low volumes in April and March.

A huge drop in fed-cattle slaughter and a lesser fall in non-fed slaughter due to plant closures and slow down caused the meat shortage which drove up prices.

Latest advice from US-based analyst Steiner Consulting is that fed-cattle slaughter bottomed in late April and production is now recovering as more workers who were sick or quarantined return to work.

Also, retail ground beef demand is slowing down, a normal seasonal market trend after the Memorial Day holiday.

This combined effect of falling demand and increasing production has greatly eased pressure on prices. In the space of just one day, 50CL beef dropped from $US278/cwt (hundred pounds) to $198.

As Steiner noted, this is by far the biggest one-day change in price of this item and illustrates how volatile and incredibly risky the beef market has become.

That said it is also likely that processing capacity in the US will not fully return to normal levels for some time.

Workers over the age of 60 at greater risk of infection are being directed to stay home and the resultant reduced pool of workers will slow line speeds and constrain beef supplies.

In consequence, US wholesale beef values will likely remain well above year ago levels for some time and that may continue to exert some influence on the imported beef market.

Back in Australia it is a very mixed bag of seasonal conditions and that is having a big impact on activity in both the fat and store segments of the market.

In the Riverina, agent Tim Drum spoke of areas that never looked better at this time of year. This was influential in the sale of middle-aged Angus cows PTIC for $2200-$2600 and young cows with autumn calves at foot for $2900.

Other buying activity was pretty much limited to turnover cattle that people could get into and out of to feedlots or backgrounding for live export out of Portland.

Tim thought current strong inquiry for Angus and Hereford heifers, which was felt as far north as the Stanthorpe weaner sale last Thursday, was likely due in part to a current live export forward contract for August/September/October delivery.

In the slaughter segment, Tim said the sheer size of the area that the Wagga market draws on and the seasonal variability that represents was keeping cow numbers flowing.

For now, with grazing cereal crops in the ground and green feed on hand going into winter, the region generally is enjoying the best autumn in a long time.

Further to the north at Tamworth, agent Phillip Hetherington commented that the country was looking the best it had been for the past three years.

But while there was a good body of grass and some handy oats paddocks around the district, follow-up rain was needed.

He noted that the market for young steers had backed off a bit from the extreme rates of a month or two ago, with only the little light fellows now making over 500c/kg but there was still plenty of activity.

It was noticeable also that some people were putting heifers away to either fatten or keep as breeders and build numbers back up depending on how the season develops.

In Queensland, Blackall agent Tim Ludgate said country south of a line from Alpha to Tambo and back around to Blackall had generally experienced a very good season but around Blackall itself was where it really started to become patchy.

West of Blackall one place has had 550mm (22 inches) for the year but 30km northeast in the normally considered rainfall belt, places there have had only 75mm (3 inches) for the year.

Coming on top of seven failed summers some of that country is looking pretty crook.

West of Barcaldine on the Downs country it is very ordinary and the Blackall side of Ilfracombe has never been worse.

Tim said enquiry from southern agents had been very strong for turn-over cattle, cows and calves, heifers and steers through to feeders to put on oats.

Last year after the March/April break there had been some light restocking in places but no one was into replacing females at the moment as the southern money had been so strong.

While the money was about he thought it likely that people would continue cutting into cow herds.

Also many of those who sold in March were now taking another cut out of their feeders because the weight gain had been so good.

These factors, coupled with the numbers coming in from Alice Springs and north-west Queensland, might be enough to see weekly sales at Blackall through to the end of June.

The story South leading cattle markets first appeared on Farm Online.

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