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How high can Australian cattle prices go in the three hundred and sixty five days of the Ox?

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How high can Australian cattle prices go in the three hundred and sixty five days of the Ox?

It be the three hundred and sixty five days of the Ox in 2021 and it be shaping as much as be a fortunate one for cattle producers who occupy loads of grass and heaps of stock.

Key points:

  • The Eastern Younger Cattle Indicator (EYCI) hit a file 888c/kg closing month, but a growing quantity of analysts in reality feel it has reached its height
  • Indonesia is feeling the pain of file-high stay export prices
  • Meat and Farm animals Australia predicts slaughter numbers will decline and the national herd will increase in 2021

The Eastern Younger Cattle Indicator (EYCI), which is the cattle industry’s key market indicator, hit an all-time high, and a truly fortunate quantity of 888 cents a kilogram closing month, which turned into once up bigger than 300c/kg on the identical duration closing year.

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The cash being forked out for younger cattle is extraordinary.

At Dalby in Queensland this week, younger steers straight off their mothers and weighing correct 133kg, fetched $7.64/kg stay-weight, or correct over $1,000 a head.

Right here’s spacious news for sellers, but spare a belief for these looking to take, including producers trying to get wait on into the cattle game after years of drought.

Processors and buyers are also feeling the pain of file high prices.

An EYCI graph 2009-2021 showing a stable line, followed by an increase, a decrease, and then a sharp increase.

The EYCI has arrive a prolonged manner since 2009, which turned into once the closing three hundred and sixty five days of the Ox.(Provided: Meat and Farm animals Australia)

How high can prices go?

A growing quantity of analysts imagine the market is manner too hot and there is a designate correction on its manner.

Independent analyst Simon Quilty felt the market had doubtlessly reached its height.

“In case you peek at the meat processors, they continue to lose significant portions of cash, their losses are around $300 to $350 a head on cows and [they are] losing $250 to $300 a head on heavy steers — that is unsustainable,” he urged ABC Rural.

“Lets peek a 17 per cent tumble, but then a 5 to 7 per cent correction, and then the market will doubtlessly switch sideways for a good six months.”

NAB senior agribusiness economist Phin Ziebell acknowledged the EYCI falling to about 600c/kg this year turned into once “no longer out of the examine”.

“The fundamentals globally intention no longer give a prefer to a EYCI that is nicely north of 800c/kg. That’s enormous and has been driven by restocker interest in consequence of of improved rainfall stipulations with this La Nina.

“We occupy had a truly good bustle and loads of people might maybe maybe be very delighted about the save the cattle industry is sitting at the moment.

“Nevertheless any threat-administration evaluation at an industry-broad stage would narrate, ‘Be tantalizing for declining prices’, in consequence of all things being equal, that is what’s susceptible to occur.”

An Indonesian consumer buys beef at a local wet market.

Indonesia is feeling the pinch of file-high cattle prices in Australia.(ABC Rural: Lydia Burton)

Hot stay export prices causing pain in Indonesia

In Australia’s a ways north, the stay export change has also hit by no manner-sooner than-viewed prices, with Northern Territory cattle producers getting about $4.10/kg for feeder steers out of Darwin trudge for Indonesia.

ABC Rural spoke to an agent this week who’s paying as much as $4.30/kg.

“It be top-of-the-tree cash, there’s absolute self assurance about that,” acknowledged Scott Riggs from High Finish Farm animals.

“At the present of the year during the wet season it be no longer ordinary to occupy high prices, but these prices occupy by no manner been viewed sooner than.”

He acknowledged quiz from Indonesia turned into once high, as feedlots regarded to lock in cattle forward of Ramadan, but he felt once the non secular duration turned into once over, prices would ease.

“I’d think these who can get their cattle in between now and mid-March will get very good cash, but there can be a correction in the market by finish of March, easiest on account of [Indonesian] feedlots being fats and they’ll be concentrating on getting stock beefy for Ramadan and Lebaran,” he acknowledged.

The prices are causing loads of pain in Indonesia, with meat sellers in Jakarta going on strike and the Government now considering imports from Mexico.

Indonesian Feedlot Affiliation chairman Didiek Purwanto acknowledged the designate of stay cattle from Australia turned into once now no longer sustainable and a number of other feedlots had gone out of business.

Location to play or stop, M to silent, left and right arrows to peek, up and down arrows for quantity.

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Beef prices bust butcher’s backside line as cattle market reaches fresh highs(Meg Bolton)

Meatworks cutting jobs

The high cattle prices are putting loads of stress on abattoirs around the nation, and according to Mr Quilty, are unsustainable.

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“We want a sustainable processing sector in Australia, they cannot go losing cash for too prolonged, in consequence of in the extinguish we will occupy avid gamers step out, which the industry can’t occupy the funds for,” he acknowledged.

In central Victoria earlier this month, Greenham and Sons made the determination to shut phase of its processing plant in Tongala.

“Some latest elements akin to the affect of coronavirus on meat markets across the globe and the exit of many dairy farms in the convey occupy induced the export manufacturing red meat business at Tongala to develop into uncompetitive,” acknowledged Greenham’s current manager of operations Tom Maguire.

Further south, Tasmanian Crimson Meat Industry Steering Committee chairman Brett Hall acknowledged every the Longford and Smithton abattoirs had decreased their hours, and on some weeks had been easiest processing for three days.

“Ideally we might maybe maybe fancy to peek [those abattoirs] going at a current price, nevertheless it be a reflection of how good a season it be been up the jap phase of Australia,” he urged ABC Rural.

Mr Hall acknowledged abattoirs had been definitely doing it tricky and hoped it can well maybe easiest be a “short-term present and quiz discipline”.

“When we get wait on to a current season in the relaxation of Australia, we will doubtlessly get a discipline the save there’s less quiz from restockers and the market must stage out a bit.”

Herd rebuild underway

After years of excessive drought, Australia’s cattle herd fell to 24.6 million head in 2020 — its lowest stage since the early 1990s and one of the key elements behind the fresh file prices.

According to Meat and Farm animals Australia (MLA), the national herd is now starting to rebuild and is never off course to upward thrust by 2 per cent in 2021.

MLA can be predicting more pain forward for processors, with cattle slaughter numbers build to tumble to their lowest stage in 25 years as producers maintain onto stock.

“Producer preferences to maintain onto younger cattle rather than flip them off into the vealer market is already evident,” acknowledged MLA’s Stephen Bignell.

“During the first few weeks of 2021, yardings and slaughter numbers had been down on year-ago phases.

“As the rebuild gains momentum on the assumption of above-median rainfall for the open of 2021, total grownup-cattle slaughter is forecast to tumble 3 per cent on 2020 phases, to hit 6.9 million head, the lowest in 25 years.”

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How high can Australian cattle prices go in the three hundred and sixty five days of the Ox?