EYCI opens down 124c; what's to come for cattle market

Processors are saying prices still need to move back a bit further for their books to shift into the black but plenty of producers and agents feel that the paddock feed situation suggests restocking demand might put a bit of upward pressure on the market in the weeks to come.

No one is talking a return to the dizzying heights of last year's records but if any sort of consensus could be put on market sentiment at this point in the year, it would be a slight firming on the current level, at least as more buyers and sellers come back to the rails after Australia Day.

On the back of an obvious dent in restocker enthusiasm at southern weaner sales, the Eastern Young Cattle Indicator opened last Wednesday at 777 cents a kilogram carcase weight, back 14 per cent or 124c on where it finished in December.

That opening price was 33pc, or a whopping 385c, back on the same time last year.

The EYCI has since dropped further and sits today at 768c.

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"It's important to remember that 2022 market conditions at the opening of the year were at record highs, and since then an intense 12 months of rebuilding stock and elevated prices have followed," Meat & Livestock Australia's senior market information analyst Ripley Atkinson said.

"Despite softening in prices, market commentary across the saleyards this week identifies that quality bred and finished stock are continuing to demand premiums to the general market and are the least affected in terms of price."

Mr Atkinson believes that trend will remain a hallmark of 2023.

Elders national livestock manager Peter Homann said it's too early to make any sort of call on the cattle market yet but there was commentary suggesting it would either 'tinker here for a while or firm up a tad.'

"Producers were expecting a correction and anyone with a few years on them thought it might have happened a while before it did," he said.

"For some reason, now it has come, it seems to have had some shock value.

"Processors are still quiet and feedlotters are still taking cattle contracted a while ago so it's really impossible to say what the sentiment is yet. In a few weeks we'll have a good idea. By then, all the players will be giving us an idea of what they are feeling."

Mr Homann said there was some 'backing up' of cattle in the system which might have an effect as it evens it.

In areas where there had been big rains, producers either haven't been able to get stock to market or up to weights and hence are not restocking.

Agents across the board said the results from southern weaner sales were nothing to scoff at.

"The best part of 90,000 calves were sold in three weeks, with steers at $1600 to $2000 and heifers outplaying that," Mr Homann said.

"While that might be $400-$500 less than last year, they are reasonable prices in anyone's book."

Mecardo analyst Adrian Ladaniwskyj felt the big price drop in southern weaners was not a good omen for demand.

It was indicative that the mood was one of caution among active buyers, he said.

"The worry is that a lot of buyers seem to be present at the saleyards already, but seem to be biding their time. Recent speculation of a potential switch to a drier El-Nino weather pattern in 2023 is unlikely to give producers confidence," Mr Ladaniwskyj said.

He agreed quality was paramount.

Online, the generally cheaper trend matched the results though the weaner sales.

AuctionsPlus reported buyer cautiousness was apparent. The offering of 400 kilogram-plus steers last week averaged $1,869 a head, with a 47pc clearance.

"With finishing conditions improving as summer conditions take hold through previously saturated southern regions, the supply of cattle through to the start of March will be closely watched, especially if the wet season really takes hold through Queensland," AuctionsPlus analysts said.