CAUTION is starting to creep into the cattle market as prices continue to soften even against declining supply.
Agents are reporting restockers seem to be stepping back, partly due to the lack of good quality stock on offer but also because young cattle prices are expected to continue their downward run.
Hanging over all that is the spread of foot and mouth disease in Indonesia and the chance it will see demand for live cattle fall off a cliff in coming months.
While agents and analysts agree it is unlikely that decreased shipments to Indonesia will result in panic selling of northern weaners, the full extent of the effect on the domestic market is another unknown.
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The store job appears to be correcting in line with finished prices and there has also been a cautious retraction of processor grids over the past few weeks.
That has been most prominent in the north but even in the south rates are down at least 10 cents a kilogram.
The Eastern Young Cattle Indicator is back below the 1000 cents a kilogram carcase weight level, sitting today at 992c, a 16c week-on-week drop and a massive 125c on the rate four weeks ago.
AuctionsPlus chief economist Tim McRae described market sentiment at the moment as being much like the weather - dull.
Each coast cattle yardings were down almost 50 per cent last week and online, there was a 31pc drop in the numbers offered.
"Producers have the feed and the flexibility to wait right now to see which way things are going," Mr McRae said.
"Keep in mind, the 1000c mark still hadn't been broken this time last year and the fundamentals haven't really changed.
"There will be bumper feed come some heat and not too many cattle around when everyone starts looking again."
Mr McRae and other analysts felt any northern cattle not sold to the live-ex market in the next few months would be soaked up well before hitting the NSW border.
"There is still alot of carrying capacity in central Queensland that will absorb those cattle comfortably," he said.
Agents agreed and said most live-ex producers also had the funds and grass at the moment and wouldn't be spooked into selling.
The cattle won't be putting massive amounts of weight on over winter and most producers would be thinking if the trade resumes a few months later, Indonesia will be wanting slightly heavier cattle anyway, agents said.
Meat & Livestock Australia's survey of six industry analysts indicates the EYCI will drop down to 953c by the end of this year. Cattle supply is expected to increase significantly in the second half of this year as the calf drops from the spring of 2020 and autumn of 2021 reach kill weights.
In MLA's February forecasts, those same analysts pinned the EYCI at 998c by the start of this month and they were on the mark. On July 5, it was 999c.