HIGH cattle prices could run for the next six to 12 months on the back of the restocker job provided rain continues to arrive in at least some parts of the eastern states, analysts and agents are saying.
After that, however, there would need to be a turnaround in the current challenging export fundamentals to offer support for an ongoing strong market.
The Eastern Young Cattle Indicator returned last week after a hiatus since late March due to movement restrictions on market reporters. It opened at a very strong 746 cents per kilogram carcase weight, only 19c below the new record in set in March, and on Tuesday night was sitting at 749c/kg.
Some analysts, such as Simon Quilty, managing director of MLX and Global Agritrends Down Under, predict the EYCI will hit 850c/kg by October or November.
Meat & Livestock Australia senior market analyst Adam Cheetham said the EYCI was likely to find further support moving further into winter.
MLA has forecast a national herd of just 24.5 million this month, which would be the lowest level in 30 years.
"That gives you an indication of the available stock out there at the moment and with improving conditions, confidence among restockers to rebuild numbers will only continue," he said.
The knock-on effect has been a downward revised adult slaughter projection, which at 6.9m head represents a sharp decline on the past two years, Mr Cheetham said.
Cattle numbers at both saleyards and online have continued to drop in the past fortnight.
AuctionsPlus' Holly Baker reported the smaller offering saw prices increase for most stock categories last week.
"Demand from restockers to replenish herd numbers continues with breeding articles highly sought," she said.
Pregnancy-tested-in-calf heifers experienced the biggest price jump on AuctionsPlus, lifting $168 to average $1,743.
Central Western NSW continued to dominate as buyers, with 2,533 head flowing into the region.
National Australia Bank agribusiness economist Phin Ziebell said there were a lot of moving parts in the cattle market equation at the moment but on balance, it came down to domestic prices being supported by restocking but export fundamentals challenged.
While restocker demand had now been tempered by dry conditions in Queensland, it was still running very hot from NSW south and a lot of northern cattle were moving down as a result, he said.
From a producer's perspective, the hope is that by the time the restocker effect has run its course on the cattle market, the global market has stabilised and long-term demand growth starts to once again exert an influence.
"Between now and then, however, we will see a hard squeeze on processors, although I don't think we're at the point yet of permanent plant closures," Mr Ziebell said.
MLA analysts report demand for finished cattle remains robust despite the export headwinds.
Over-the-hook cattle indicators across the eastern states maintained an upward trajectory during May, they said.