YOUNG cattle prices continue to track sideways, with a slight drift lower, but more significant declines are looming.
Growing numbers are hitting Queensland saleyards as producers in the northern parts of the sunshine state and the Northern Territory crunch the numbers after below average rainfall for the past two months and start to offload younger, lighter cattle.
While some agents say demand is soaking up extra volume as quickly as it arrives, analysts expect young cattle prices to continue to drift downwards on account of both the season and beef export prices.
The Eastern Young Cattle Indicator has declined to the tune of around 100 cents a kilogram carcase weight since the end-of-January peak dip.
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Rabobank's April Agribusiness Monthly report pointed out more than 20 per cent of the country's cattle are in those northern areas so downward pressure is building.
Queensland's saleyard numbers were up 10pc year-on-year in March and 7pc on the five year average, Rabobank's Angus Gidley-Baird reported.
One flow-on effect of the advance sale of lighter cattle in the north could be constrained numbers available for live export later in the year, he said.
Thomas Elder Markets' fair value modeling work indicates both the EYCI and the heavy steer market are currently overvalued.
TEM expects the annual heavy steer price this year to be 365c/kg live weight. It is currently sitting at 460c nationally.
The EYCI annual average is expected to be 828c/kg carcase weight, with a potential range of 640 to 1020c/kg, TEM's Matt Dalgleish said in a Meat & Livestock Australia Productivity and Profitability webinar this week.
"As we move towards increased beef production and slaughter this year, the forecast is for the market to soften," he said.
"I wouldn't call it a crash but certainly there are more headwinds on cattle prices where they sit currently than demand pushing the market higher."
TEM's modeling indicates heavy steer prices should be back into the low 300s in 2023 and the EYCI back towards 700c.
Beef export volumes, meanwhile, continue to be well below long-term averages, reflecting low production but more worrying for the cattle market is that export prices appear to have peaked.
The trend seems to be directing more beef into major markets, Mecardo analyst Angus Brown said.
"The good news is the demand for our beef is likely to remain strong when supplies increase but prices may have to ease a little to meet the demand in some of the smaller markets," he said.
Mr Dalgleish's webinar presentation made the point that the export flow data from March has pushed China back into second spot in terms of Australia's biggest markets. Japan retains top spot but South Korea has now been relegated to third.
China saw a 17pc lift in beef export consignments from Australia over March, Mr Dalgleish said.
However, average monthly flows over the first quarter of 2022 to China are running 15pc under the five-year average pattern.
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