Conflicting market indicators are creating uncertainty for future cattle price trends
An opportune conversation on Australia Day got me thinking of where cattle prices are heading, although the topic at the time was about lamb prices.
There have been several, exceptional peaks in lamb prices over recent months, and my conversation was about retail wanting cheaper buy in prices, and when this has occurred, it has not come down in the shop.
The same can be said of beef prices with retail outlets offering very little change to the shopper, while producers have been taking a drop in income.
For me, it would appear obvious that to invigorate more demand for red meat, retailers should pass on the current drop in market prices.
It won’t matter how much i, or we complain, retailers will come up with any excuse against lowering prices. Equal profits can be made from selling more for less.
One of the main reasons i bring this up is, an uncertainty in future prices, and conflicting signs given at some recent sales.
It is my belief that cow prices determine that of all other prices, and with the current downturn in all cattle prices being led by the demand for cows, it could spell some pessimism into our industry.
More recently, extremes in heat have been blamed for a large downturn in supply at physical markets, but maybe it is just the weakening price trends.
I have heard on the grapevine that processors have said cow prices may fall another 20 cents per kilogram liveweight in the next few weeks. If this occurs then other prices will tumble along with them.
Will this trigger cheaper meat in the shop, maybe, maybe not, as the more stable prices at the moment are vealers and trade cattle.
I follow a lot of markets, both physical, and store cattle sales. This Monday just gone, SEJ Leongatha held their annual steer and heifer sale, and it was interesting to see the higher level of feedlot competition, both for domestic and export.
Steer prices at this sale were easily 20c/kg lwt above physical markets. Maybe this is because much of the yarding comprised of yearling steers and heifers, that would normally be sold in a fat sale.
There were at least two processors buying cattle to feed, one domestic, and one exporter, and one feedlot supplying a supermarket. Their competition aided the higher prices.
Many of these cattle will be fed from 90-120 days, so this brings them back for slaughter around the end of March to April-May.
So, does this indicate a supply shortfall going into autumn, or an we expect rising prices due to lack of supply.
Contradicting this is MLA’s Eastern States Feeder Cattle Report, released Monday evening. This weekly report showed a fall in offered prices, direct to feedlots.
Domestic price offerings have fallen 8-11c, and export prices were anywhere between 3c for long term feeder steers to 13c for short term feeders.
At an average of 294, 301, and 305c/kg respectively, these quotes are well below what i saw paid on Monday.
So the current scene leaves me perplexed about future prices, and if i am confused, then so should you be.
I, like many, have steers sitting in the paddock that owe me good money, which could be returned in a solid store sale, but not in a fat market.