Does Queensland rainfall hold the answer to the cattle price question?

The “winning streak” for Australian cattle prices looks set to continue into the final quarter of 2021, if the recent rainfall outlook delivers. With the EYCI seemingly comfortable at four-figures, heavy steers regularly exceeding $2,500/head and bull sales activity at a fever-pitch, the outlook for the final quarter of 2021 should continue to put a smile on sellers faces and instill confidence in producers well-invested into the herd rebuilding phase.

The most recent three-month rainfall outlook from the Australian Bureau of Meteorology (BOM) states that “rainfall for October to December is likely to be above median for much of the NT, SA, Queensland, NSW, Victoria and eastern Tasmania (chance of exceeding median is greater than 60%)”. Thus, the likely continuation of the above average seasonal conditions for southern Australia will maintain key market fundamentals which have driven the record price run in recent years. For Northern Australian producers, especially those through the drier regions of Queensland, an early and sustained start to the 2021-22 wet season would be very well received, if not critical.

Figure 1: Australian Three-Month Rainfall Outlook

In an additional step, the BOM accuracy through this period is encouraging, stating that “October to December rainfall is high to very high for most of northern and eastern Australia”. Given the disappointing rainfall through key cattle producing regions of Queensland for the final quarter of 2020 (see figure 2), the outlook for the coming three months is much more encouraging. While forecasts are handy guides, it won’t be until rain gauges are emptied on a frequent basis that some key Queensland regions will join the herd rebuilding bandwagon. Indeed, a heavy start to the wet season throughout Queensland could further fuel the current cattle price inferno, especially if supplies are retained, or even potentially disrupted through flooding into the later parts of the wet season.

With the combination of dry conditions in the north and the lure of high cattle prices in the final quarter of 2020, AuctionsPlus cattle offerings out of Queensland skyrocketed. In the final three months of last year, offerings hit 70,535 head – an increase of 223% and 279% from the final quarter of 2019 and 2018, respectively. Comparatively, MLA reported Queensland cattle yardings for the final quarters of 2018, 2019 & 2020 to be stable, ranging between 213,000 – 221,000 head. The average December quarter of Queensland yardings for the past ten-years stands at around 194,000 head.

Given that the current market has already fully factored in the excellent season through the southern states of Australia, the possible onset of wet conditions through Queensland in late 2021 could be “the last positive seasonal bullet remaining to be fired”. Indeed, a return to average for seasonal yardings through Queensland in the final quarter of 2021, combined with a reduction in the online offerings could see a conservative estimate of 35-50,000 head of cattle “out of the market” …at a time when supplies are already at generational lows.