WITH young cattle prices continuing to tread water in high territory, producers with stock to market and plenty of feed still in paddocks are walking a tightrope between capitalising and not getting caught in a downtrend.
Most analysts believe there is a good chance prices across the board will ease somewhat as winter draws closer but so far the Eastern Young Cattle Indicator is holding relatively steady, prompting decisions to keep putting weight on.
The EYCI on Wednesday morning sits at 860c/kg carcase weight, having dropped only have a cent in the past week.
Mecardo's Angus Brown says even with a herd at an extreme low and prices at extreme highs, the pattern of supply should still show some seasonality, which means a peak in slaughter in May and the corresponding price fall.
However, he believes there is a month or two before significant downside is likely, at least from the supply side, and even then the drop is unlikely to be large.
Given the state of the herd, and with a reasonable season forecast, price falls are unlikely to take the EYCI down below 800c, he said.
Livestock manager at Elders Albury Brett Shea said despite the high prices on offer for feeders at the moment, the fact producers can't get back in with a sizeable gap was keeping cattle in paddocks.
At 470c/kg for feeder steers, a 430kg animal might return $2020 but to replace him, buyers would be looking at a store market demanding $1700 or more, he said.
"At the same time, producers have feed in the paddock so they are hanging onto those cattle," Mr Shea said.
"It will only be if the season cuts out that their hand might be forced."
Mr Shea also said that more than ever before people who have traditionally traded steers or heifers are happy to look at other opportunities, such as cows and heifers or joined females as trade options.
They do that with the idea in the back of their mind that if market conditions change significantly, they might retain those females and breed their way to a profit, he said.
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Government economists are forecasting that while saleyard prices will start to fall from the end of this financial year, they will remain above the long-term average.
Chris Mornement, from the Australian Bureau of Agriculture Resource Economics, indicated decreasing demand in export markets could be a key driver for falling prices.
Prior to rain arriving last year, saleyard prices were supported by strong demand in export markets, he said.
The spread of African swine fever across China created a large gap in global protein supply and Chinese import demand, and thus meat prices, soared from mid-2019.
As the Chinese pig herd recovery progresses, ABARES is assuming demand in world meat markets will fall, however it acknowledges the timing of that return is subject to many uncertain factors.
Indeed, several analysts say it's not going to happen anytime soon.
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