Big supply from the south takes toll on cattle market

Rain in some key cattle localities is forecast this week which agents say should temper the enthusiasm to offload somewhat but by and large in the south the expectation is for stronger volumes on offer for the rest of the year.

Nationally, processor cow yardings are up 94 per cent, heavy steers are up 85pc and feeder steers up 47pc compared to this time last year, Meat & Livestock Australia data shows.

It's the southern areas, particularly in NSW, that are driving the increased national yardings, with Queensland numbers a lot quieter - and some sales even cancelled due to lack of numbers.

Wagga Wagga, for instance, has seen two weeks of more than 5000 head yarded, compared to a typical 3500 this time of year.

Isaac Hill, Wagga Regional Livestock, said while there was still a lot of bulk in feed around the Riverina, Wagga sale drew from a big area and those in tougher parts were opting to send south for the grass competition.

"We are still in a normal spring drying pattern here but the pending El Nino has absolutely got people looking to offload anything surplus - they are conscious of being well stocked after three good seasons," he said.

MLA senior market information analyst Erin Lukey said producers were turning off cattle significantly more than at the same time last year.

"We can attribute this to the Australian herd sitting at 28.7 million, the largest for a decade, and possible producer concern following the Bureau of Meteorology's announcement of an El Nino," she said.

MLA reported yardings rose in every mainland state except South Australia last week.

As a result, saleyard cattle prices trended down, with relatively consistent price movements between states and indicators.

The Eastern Young Cattle Indicator is now at 346 cents a kilogram carcase weight, having dropped 20c in the past week. It is an incredible 739c below where it was this time last year.

The heavy steer is also back 223c/kg live weight on this time last year.

Rabobank senior animal proteins analyst Angus Gidley-Baird said quarter two female slaughter numbers were up 26pc year-on-year.

"That indicates maybe we've moved through the whole herd rebuild phase and producers are starting to make decisions about how many cattle they want on the ground at the moment," he said.

However, he felt it was high volumes of stock already in the system and lack of capacity among processors that was having the biggest influence.

He said global protein inventory levels were very high at the moment.

"In Japan, one of our largest markets, beef in storage figures are 18pc higher than the five-year average, albeit starting to level out," Mr Gidley-Baird said.

"Congestion in the supply chain, with large amounts of stock already in inventory, is one of the main things holding up the system at the moment for the beef market. So if we start to see volumes move through the system a lot quicker, it will give processors a degree of relief that there is a home for their beef to go to and they'll start adding extra shifts to increase capacity."