It’s a bit of an understatement to say there has been plenty going on in livestock markets in recent weeks. The tariff story has been done to death, but as I sit down to write this, the US has increased tariffs on China to 104%. More on this later. Firstly, we’ll look at the Queensland floods.
Editor's update: As of Thursday morning, the US suspended higher tariffs for 90 days and has lowered reciprocal tariffs to 10% leaving Australia is the same position it has been. China’s has been whacked with tariffs of 125%.
The flooded region of Queensland is the third-largest cattle region in Australia. At last count, in 2021, there were 1.63 million head out in the Desert Channels. This is not to mention surrounding regions, which have been partly affected, holding another 1.8 million head.
With transport interruptions and cancellations of sales at Dalby and Roma last week, Queensland cattle yardings have tanked in the last fortnight. Last week’s Queensland cattle yardings totalled just 4,100 head. Figure 1 shows this is more like the Easter yardings of last year. This week, the Roma Store sale was back, yarding 2,218 head, which is about 40% off the average for this time of year.
With sudden supply shocks, we often see prices rally. Processors and feedlots have orders and space to fill and have to go in search of cattle. The Eastern Young Cattle Indicator (EYCI) and Online Young Cattle Indicator (OYCI) both experienced significant rallies over the last fortnight, gaining around 10%. The OYCI is at a two-year high, having just edged past 400¢/kg lwt before easing back a little this week.
Cow prices were the star performer. In NSW and Queensland, cow values at saleyards rallied 12–20% to be on the cusp of 600¢/kg cwt. We haven’t seen this price for cows since November 2022.
Stock losses are the unknown out of the floods. How many cattle were lost will not only affect future supply but also demand, as the area will need to be restocked when floods recede and feed supplies boom.
In theory, cow prices should suffer from the 10% tariff to the US, but it looks like local supply tightness and a weaker Australian dollar are counteracting any weakening of demand from the US at the moment.
The China–US trade dispute will likely have more impact than the direct tariffs on Australian beef. Already the flow of US beef to China has slowed, which creates an opportunity for our exports. However, the 104% tariffs on Chinese products could slow growth and weaken demand for red meat.
For those in the market for a new smartphone—which is the biggest category of Chinese exports to the US—they may get cheaper in the coming months. Not much compensation for the anxiety of a trade dispute to export-focused livestock industries.