The Mecardo team have been suggesting a price bounce was imminent for the last few weeks given the rainfall forecast, recovery in export prices and falling supply at the saleyards. But as the old trading adage goes, “even a broken clock gets it right twice a day” so we won’t puff out our chests too much on this one.
Figure 1 shows the rainfall for the week with much of Southern Queensland getting some reasonable action. This, along with the forecast of some further falls expected for NSW into October (according to the most recent BOM outlook), has given a bit of a boost to optimism here for producers and both NSW and Queensland responded this week with significant decreases to yardings.
Queensland cattle yardings were down 50% on the week, while NSW saw a 58% decline in numbers at the saleyard. This reduction in supply helping to push the weekly East coast yarding figure to the lowest it has been all season at just 24,818 head recorded – figure 2. This throughput measure is well below the normal range and sits 53% below the five-year average for this time of the season.
The decreased supply also evident in young cattle numbers with EYCI yardings also registering its lowest average weekly figures since September 2016 at just 9,537 head. Indeed, EYCI cattle throughput has fallen 50% over the last month and the reduced supply has given some support to prices this week. The EYCI recovering 5.4% to close at 533¢/kg cwt. The young cattle price boost was not limited to the East coast alone with the WYCI up a similar magnitude, staging a 5.8% increase to 558¢ - figure 3.
The week ahead
The recovery in the 90CL beef export price over the last few weeks signalled that young cattle prices were getting a bit undervalued; and all it took was a bit of rain and tightening supply to see the market find a base. The 90CL now sits at 589¢/kg CIF and reports out of the US indicate that both domestic and export demand is strong and feeding into higher grinding prices.
The prospect of steady to firmer export prices in the coming weeks and a better weather outlook for much of NSW should see cattle prices continue to be supported locally.
Mecardo Market Analysis